Aerostar SA

Identification data and field

of activity

Telephone/fax number:

AEROSTAR S.A. established on 17 April 1953 by Decision of the

Council of Ministers No 1165.

The activities are carried out at the company’s head office, located at 9,

Condorilor Street, Bacău, postal code 600302.

Since January 2018, AEROSTAR has registered a secondary office and

workplace in the perimeter of the International Airport Iasi;

In 2023 a new workplace and secondary office was opened in the

municipality of Fetești;

The company’s unique European identification code (EUID) is

ROONRC.J04/1137/1991, and the LEI code identifying it as a legal entity

is 315700G9KRN3B7XDBB73;

The company’s core business is manufacturing. The company’s core

activity is ’Manufacture of aircraft and spacecraft’ - CAEN code 3030;

Subscribed and paid-up share capital: 48.728.784 RON;

Applicable accounting standards: The company financial statements

are prepared in accordance with the provisions of the International

Financial Reporting Standards (IFRS) adopted by the European Union,

the Accounting Law no. 82/1991, republished, as amended and

supplemented, and are presented in accordance with the requirements

of IAS1, Order 2844/2016 for the approval of the Accounting Regulations

in accordance with International Financial Reporting Standards.

The bases of preparation and presentation of the financial statements are

presented in Note 3;

The individual financial statements prepared for the Year 2023 are

accompanied by the independent financial auditor’s report;

AEROSTAR S.A. is listed on the Bucharest Stock Exchange under the

code ARS, and the record of shares and

shareholders is kept, in

accordance with the law, by S.C. Depozitarul Central S.A.

COMMITTED TO A SUSTAINABLE

FUTURE!

Committed to a sustainable future, through its proposed objectives and commitments, our

company channels its efforts into achieving its main goal of increasing sustainability by

associating profitability with responsibility, increasing value in the short, medium and long term

and thus increasing the company’s performance. Through the objectives addressed in the

company’s strategy and confirmed in the sustainability statement, AEROSTAR aims year after

year to exceed its targets by achieving its proposed goals.

AEROSTAR’S STRATEGY INVOLVES INCREASING ITS ENGAGEMENT IN ALL ASPECTS

OF SUSTAINABILITY.

The environmental, social and personnel issues, the respect of human rights, the fight against

corruption and bribery are top priorities for AEROSTAR, and therefore relevant data and

performance indicators are communicated in the annual and periodic reports, in line with the

best practices, procedures and company policies, following the guidelines of the legislation in

force.

The information on sustainability presented in this report reflects the company’s commitment,

values and goals set for a sustainable business and for striking a balance between shareholders’

expectations, the needs and concerns of our employees, members of our community as well as

of all relevant stakeholders.

The financial statements are published on an individual basis, disclosing information that is

audited, balanced and reader-friendly.

We are guided by a sense of responsibility towards sustainable development, we consistently

apply best practices in the field and in line with the practices of our business partners, we

provide transparent information, explanations and data in these categories of financial and non-

financial information.

Meeting our customers’ requirements, ensuring complete safety for the users of our products

and services, engaging with the local community, improving continuously and increasing our

environmental performance are the principles that guide our work.

Our sustainability goals, correlated with the business environment and global developments,

are incorporated in our company’s overall long-term strategy.

WE BELIEVE THAT BY ACTING RESPONSIBLY

WE WILL CONTRIBUTE TO LONG-LASTING ECONOMIC SUCCESS.

BY PURSUING SUSTAINABLE DEVELOPMENT

WE ARE HEADING TOWARDS A MORE SECURE FUTURE.

p. 4

MESSAGE FROM THE PRESIDENT OF THE BOARD OF DIRECTORS

AND GENERAL DIRECTOR GRIGORE FILIP

In spite of being over 70, AEROSTAR still

proves to be young.

The large number of young people

interested in discovering what goes on at

Aerostarcombinedwithour

achievements and the local community’s

progress in guiding and training them

towards technical fields with application in the

aviation industry, make me believe that in the

future we will be able to meet the

expectationsofthedynamicmarket in which we

operate.

GENERAL DIRECTOR & PRESIDENT

GRIGORE FILIP

We look optimistically to the future,

determined to bring value to our customers,

employees, investors and the local

community.

AEROSTAR’s annual report was prepared in accordance with

the reporting regulations in force, in order to provide

additional information to all stakeholders about the

company’s sustainable strategy and the progress it has made

in its corporate processes.

A look at our history - 70 years of continuous

activity

2023 vs. 2022

Information about our company’s activity

Business environment and model

Aerostar’s Strategy

Sustainability in Environment and Quality

Aerostar, a top employer

Social and personnel issues

Local community

Corporate Governance

Risks, impacts and opportunities

Summary financial statements

AEROSTAR was named successively URA-1953, IRAv (Aircraft

Repair Company)-1970, IAv (Aircraft Company)-1978, and

AEROSTAR S.A. since 1991, when it was registered as a joint-

stock company at the Bacău Trade Register.

TOTAL INCOME up by

~ 12% compared to

AEROSTAR is a company with 7 decades of experience

TOTAL EXPENDITURE up by

in the aviation and defence industry.

Over the years we have established a global

footprint, focused on fulfilling our customers’

mission, requirements and expectations through

continuous improvement actions at all levels.

Today, thanks to our expertise, we are a national

market leader and an integrated supplier in the

global supply chains of the major aerospace

companies.

NATIONAL MARKET LEADER AND INTEGRATED SUPPLIER IN THE GLOBAL SUPPLY CHAINS FOR THE

KEY FIGURES OF 2023

GLOBAL AVIATION INDUSTRY.

Since its establishment in 1953, AEROSTAR has expanded nationally and internationally.

AEROSTAR’s customers are located in Europe, Asia, Africa, USA and Canada.

In the field of civil aviation AEROSTAR is a supplier of aerostructures, components and assemblies

for the global aviation industry with end customers such as Airbus, Ariane Group, Boeing,

Bombardier, Dassault, GKN Aerospace, Gulfstream, Premium Aerotec, SAFRAN Landing Systems and

other companies.

AEROSTAR is the leading independent regional provider of maintenance services and is authorized

to perform MRO work on Boeing 737 300-900 series, Boeing 737 MAX, Airbus 320 family, ceo & neo

and component types.

AEROSTAR is active in modernization, integration and maintenance programs for military aviation

and defence systems, and is a leading supplier for the Romanian Ministry of National Defence.

The synergy of our skills and experience in the civil and military market contributes to consolidating

Aerostar as a sustainable and forward-looking company.

In Canada - USA we supply aviation products and in Asia and Africa we provide civil aviation

maintenance services.

In Europe we provide maintenance services for civil aviation, aviation products (landing gear

systems, mechanical parts, assemblies and sub-assemblies), electronic equipment and ground

equipment.

In Romania we provide repair services for military aircraft and repair parts and electronic

components for military aircraft, upgrades, integrations and maintenance for military

aviation systems, system and launcher repair services and civil aviation products.

AEROSTAR’S PRESENCE ON THE GLOBAL

MARKET

OVERVIEW OF THE HISTORY OF AEROSTAR - 70 YEARS OF

Founding the Aircraft Maintenance Plant on

17 April 1953 for the purpose of repairing the

Romanian Army’s aircraft.

Years ‘60

Diversification of production by manufacturing

military ground products and initiation of repairs on

the first MiG-21 aircraft types.

Years ‘70

The name of the Aircraft Maintenance Plant was

changed to the Aircraft Repair Enterprise

Assimilation of the series production of the Iak-

52 school and training aircraft.

Participation in the design and execution of the

prototype of the first Romanian jet fighter IAR-

93.

Years ‘80

Assimilation of repair of RU-19 A300, M-14 engines

Extension of maintenance services for fighter aircraft,

including L-39.

Founding of the Electronics and Radio

Equipment Factory.

Design and production of landing gear for IAR-99

aircraft.

Years ‘90

IRAv became a shareholding company with the name

AEROSTAR S.A.

Aerostar became the main contractor for the

upgrade of the MiG-21 aircraft of the Romanian

Army.

A total of 110 MiG-21 aircraft have been

upgraded.

Years ‘00

Attracting customers in the Western region for the

manufacture of aeronautical products and

collaborating with major players in the civil aviation

market.

Conversion from military to civil aviation.

Years ‘10

Assimilation of know-how in the maintenance

of Boeing B737 300-900 series and Airbus A320

family civil aircraft.

2023

70 years in the aviation industry!

Over 1000 civil aircraft released into service

after maintenance.

Over 4000 military aircraft released to service

after maintenance.

Over 7000 military engines repaired.

The annual negotiation between the AEROSTAR S.A. Management and the Employees’

Committee of a new Supplementary Agreement to the Collective Labour Agreement for the

period: 01.04.2023 - 31.03.2024 has been completed. As of 1 April, benefit packages and

salary increases of 15% have been provided for the company’s employees.

17 April 2023

AEROSTAR CELEBRATED 70 YEARS OF CONTINUOUS ACTIVITY!

28 April 2023

Information on the dividend payment arrangements was posted on the company’s

website www.aerostar.ro in the Investor Relations section.

17 May 2023

The mandate of the external auditor Auditeval Consulting SRL was extended for a period of 3

years.

7 June 2023

A BLOOD DONATION CAMPAIGN was organised at the headquarters of AEROSTAR with the

support of our colleagues who wanted to offer a second chance at life for those in distress.

With the support of the volunteers from AEROSTAR, a BOOK DONATION CAMPAIGN was

organised, and thanks to these donations, we managed to populate a mini library with over 500

books for a school in the county of Bacau.

7 June 2023

Opening of a secondary office in the municipality of Fetești, Romania.

EVENTS AFTER THE REPORTING

DATE

Appointment of Mr. Alexandru Filip as DIRECTOR GENERAL as from 1 March 2024,

following the retirement of Mr Grigore Filip.

Appointment of Mr. Vîrnă Daniel as DIRECTOR OF LEGAL AND HUMAN RESOURCES

DEPARTMENT, with effect from 1 March 2024.

Appointment of Mr. Popa Dan Mălin as ASSISTANT DIRECTOR VOCATIONAL TRAINING with effect

from 1 March 2024.

Inauguration of the BLACK HAWK S-70 HELICOPTER MAINTENNACE CENTRE on 18 January

2024, authorised by both the helicopter manufacturer - Sikorsky (part of the Lockheed Martin

group) and the National Military Aviation Authority.

Further information on the Events after the reporting date can be found in Note 33.

p. 11

FINANCIAL PERFORMANCE RESULTS

Export share of turnover

%

81%

69%

Actual number of staff

Investment expenditure

MAIN ECONOMIC AND FINANCIAL INDICATORS

Financial Indicators

Current liquidity indicator

Leverage ratio indicator

0

Debt turnover - customers

Fixed assets turnover rate

Overall solvency ratio

Financial rate of return Net

NATIONAL CURRENCY EXCHANGE RATES FOR 2023

*Source:

www.bnr.ro/cursurivalutare

AEROSTAR prepares its individual financial statements in accordance with the International Financial

Reporting Standards (IFRS).

UM

Monetary indicators

Average exchange rate EURO/12 months

Average exchange rate USD/12 months

Curs average exchange rate GBP/12 months

Inflation

lei/euro

lei/USD

lei/GBP

%

31.12.2023

4,9465

4,5743

5,6869

6,6

31.12.2022

4,9315

4,6885

5,7867

16,4

p. 12

THE COMPANY’S APPROACH TO SUSTAINABILITY - DASHBOARD

ENVIRONMENT

Mitigating climate change Atmospheric

emissions of greenhouse gases:

800 allocated GHG certificates 2983

GHG allowances surrendered

a reserve of 11931 GHG certificates

4% less CO2e emissions compared to

We respect the environment, nature and

resources

Pollution prevention

Waste

46% more waste recovered in 2023

Emissions of volatile organic compounds

32% fewer emissions generated in 2023.

REACH - Regulation on Registration,

Evaluation and Restriction of Chemicals

AEROSTAR has adhered to the

requirements of the European Reach

Regulation since 2014, continuously and

progressively supporting various actions to

reduce environmental impact.

We manage, evaluate and monitor in a

responsible and effective way the activities

with environmental impacts!

Through the Environmental Management

System we have clearly defined the

responsibilities and actions necessary to

follow up and comply with the conditions

authorised under the REACH Regulation.

SOCIAL

Diversity and inclusion

1846 employees

29% women

71% men

27% women in the management

structure

60,62% average degree of unionisation We

support, respect and guarantee equal and

non-discriminatory treatment!

509 selection interviews,

70% of the candidates participating in the

selection interviews were employed, the

percentage of women was 19,83%

We support the professional development of

employees by including them in training

programmes

1870 employees included in training

programmes

29 training hours / employee / year

We support and campaign for quality

education!

Internships at AEROSTAR in 2023

580 pupils

39 students

259 scholarships granted by Aerostar to

students in dual education for the school

year 2022-2023.

The value of the grants awarded for

2023 was 344.789 lei.

Budget allocated for the annual training

plan.

Multiple partnerships entered into

withpre-universityanduniversity

institutions.

GOVERNANCE

Business conduct and ethics

We uphold the principles and values of

the company honestly, fairly and with

integrity, with the highest ethical

standards!

We are committed to Building a

Sustainable Future!

In 2023 AEROSTAR continued to

invest in sustainable objectives that

contribute coherently and

systematically to achieving climate

neutrality.

Investments made in 2023:

90% of the approved budget allocated to

development investments

78% of the approved budget invested in

state-of-the-art equipment

Investment expenditure in 2023 is

over 19.000 thousand lei.

Implementing our climate change

mitigation objectives.

Involvement in research and

development projects that contribute to

sustainable industrialisation through

innovation.

We are guided by the responsibility for

sustainable development

aerostar@aerostar.ro

DISTRIBUTION OF SALES BY PRODUCTS AND SERVICES REPRESENTING BUSINESS

LINES

DISTRIBUTION OF SALES ON AEROSTAR’S

MARKETS

From the turnover of 506.294 thousand lei, achieved during 2023, the company sold products

and services worth 95.386 thousand lei on the domestic market and worth 410.908 thousand

lei on the foreign market.

Approximately 81% of the turnover represents export sales. Compared to 2022, the percentage

of export sales has increased in Europe and Asia. In terms of demand for the products and services

provided by AEROSTAR, a selective growth has been noted.

Manufacture of aviation

products

Maintenance of

commercial aircraft

Defence systems - air,

RomaniaEuropeAsiaAfricaCanada+USA

INFORMATION ABOUT THE COMPANY’S ACTIVITY

AEROSTAR’s business focuses on increasing performance through continuous improvement and

professional development of employees in the spirit of integrity, innovation and initiative.

AEROSTAR focuses on meeting the requirements and expectations of its customers, acting for

continuous improvement at all levels. AEROSTAR operates on three business lines.

In civil aviation we supply aerostructures, components and assemblies to the global aviation

industry.

We hold commercial aircraft maintenance authorisations and are currently authorised to carry

out Type A, B, C and D work on Boeing 737 300-900 series, Boeing 737 MAX, Airbus 320 family,

ceo & neo and component types.

We are a maintenance centre for the F-16 aircraft of the Romanian Army and we are part of

the national defence industry according to law 232/2016.

The equipment, assemblies and parts

produced by AEROSTAR are used on

a large number of commercial

aircraft: Airbus A320, A321, A330,

A350, Boeing B737, B787, B767,

Gulfstream G650, Dassault F7X,

Bombardier Challenger 600 series

and Global 5000/6000 series, as well

as parts for the European Ariane 6

rocket.

By readapting to the new market

requirements regarding the new

production structure, as well as the

new quality and environmental

protection requirements,

AEROSTAR maintains its leading

position in Romania for the

manufacturing of aviation products

and strengthens its position in the

supply chain of major global

companies in the aviation and space

sectors.

In 2023, the production volume

continued to grow with both the

existing and the new customers, with

the year being marked by the

completion of the assimilation of a

new package of individual parts and

small sub-assemblies that are part of

the Airbus A330 aircraft.

AEROSTAR has a significant footprint

in terms of business volume in the

Civil Aviation MRO sector, as an

independent provider of

maintenance services at industrial

level for commercial aircraft of the

Airbus A320 ceo&neo and Boeing

B737 300-900 family.

In 2023 AEROSTAR’s EASA Part-145

approved maintenance base

developed and strengthened its

market position, by obtaining an

extended range of approvals from

the civil aviation authorities.

The year 2023 was a year of growth

and development, with

achievements that included reaching

the milestone of 100 aircraft

released into service after

maintenance and a cumulative total

of over 1100 aircraft released into

service since the creation of the

business line.

Furthermore, the development,

modernisation and investment

programmes continued this year, at

both the maintenance centre in

Bacau and the one in Iasi. The

investment process aims to

accelerate the training and

specialisation of technicians and

engineers dedicated to these

activities and to continue equipping

the hangars with modern equipment,

which implicitly leads to an increase

in the maintenance capabilities and

capacities and, last but not least, to

an improvement in the efficiency of

the operating staff. At the same time,

it marked the beginning of new

collaborations that resulted in

extensive projects such as: cabin

reconfigurations from classic to

premium and integration of

entertainment systems for passenger

comfort.

In the defence systems business line,

AEROSTAR is a first-tier supplier to

the Romanian Ministry of National

Defence.

AEROSTAR is the maintenance

centre for F-16 aircraft of the

Romanian Army.

AEROSTAR has steadily developed

the capabilities needed to

strengthen its position as a supplier,

increasing its expertise in the field of

maintenance and modernization of

military aircraft, in the field of

ground launch systems and radio

communication systems, as part of

command and control systems.

During 2023, following the

demonstration of capability through the

completion of major modification

projects on An-26 and An-30 aircraft and

the assessment during audits, the

National Military Aviation Authority

(AAMN) has extended the scope of

authorisation of the Military Design

Organisation, under certificate

RO.AAMN.21J., to major modifications

and repairs applicable to Romanian

state aircraft.

As a result of extending the scope of

authorisation, the Military Design

Organisation has the right to develop

modification and major repair projects

and approve major repair projects for

large and small state aircraft within the

terms of the approved scope of

AEROSTAR’s Board of Directors was elected for a period of four years at the General Meeting of

Shareholders held on July 9, 2020. The election was done by secret ballot, with the new term of

office of four years starting on July 11, 2020 until July 10, 2024.

In order to stay up-to-date with all essential company data, the BoD maintains constant contact

with the executive management and operational management. At the same time, given the

direct participation of two of the Board members in the executive management, the

management has unrestricted and direct access to the company’s information.

As a result, the Board receives regular ad hoc reports that focus on key areas of financial and

operational issues as well as occupational health and safety, human resources, procurement,

investment, research and development, community relations and philanthropic issues.

Thus, the Board considers impacts, risks and opportunities when overseeing the company’s

strategy and makes direct decisions on major transactions and its risk management processes.

As on 31.12.2023 the Board of Directors of Aerostar had the following structure:

Further information on the Board of Directors can be found in the Corporate Governance chapter on page

45.

EXECUTIVE - OPERATIONAL MANAGEMENT

In relation to AEROSTAR’s organisation and management system, the management structure at

operational level ensures the management of activities on the basis of a divisional organisation,

based on management centres for production, auxiliary activities and operational activities.

p. 17

The executive management is ensured by the General Director and the Financial Director. The

management structure at executive-operational level is completed by the other division and

directorate managers.

On 31.12.2023, the executive-operational management had the following structure:

Director General

Financial-Accounting Director

Filip Grigore

Damaschin Doru

Filip Alexandru

Deputy General Director

Rogoz Vasile Laurențiu

Quality Director

Human Resources Director

Logistics Division Director

Director of Defence Systems Division

Director of Aeronautical Products Division

Director of Civil Aviation MRO Division

Branche Cătălin Bogdan

Director of Utilities and Infrastructure Division

Further information on Executive Management can be found in the Corporate Governance

chapter on page 46.

COMPANY ORGANIZATION

AEROSTAR carries out its business by using the common resources of the organisation in an

integrated way. The divisional structure maintains the principles of organisation and use of

resources in a unified, competitive and integrated manner. This organisation has ensured the

development of capabilities for the implementation of new civil aviation and defence

programmes, as well as the investments required for this purpose. The company is managed as

a unitary system.

AEROSTAR

SHAREHOLDERS

Thereareno disputes with the above-mentioned persons. During the current year, no subscriptions

for new shares or any participation certificates, convertible bonds, options or similar rights were

registered.

The significant shareholders of AEROSTAR S.A. are IAROM S.A. Bucharest and EVERGENT

Investments S.A. Bacau. The summary structure of the company’s shareholding as of 31

December 2023 is as follows:

ShareholdersNumber of sharesPercentage %

IAROM S.A. 108,866,403 71,49%

Evergent Investments S.A

RELATIONS WITH SHAREHOLDERS AND THE CAPITAL

MARKET

In its relations with shareholders, AEROSTAR has taken care to protect and ensure the

shareholders’ rights, namely:

to participate in General Meetings directly or by proxy - by providing them with special proxies,

postal ballot papers, other useful information;

to be treated fairly, irrespective of ownership;

to receive dividends in proportion to each shareholder’s holdings.

In relation to the capital market, AEROSTAR has fulfilled all the reporting obligations arising

from the legal provisions by publishing continuous and periodic reports in the electronic system

of the Financial Supervisory Authority and the Stock Exchange, on the company’s website and

through press releases.

In accordance with the provisions of the Corporate Governance Code, continuous and periodic

information was disseminated simultaneously in both Romanian and English.

Shareholders can obtain information about AEROSTAR and the main events on the website

www.aerostar.ro.

Annual and half-yearly reports for the last ten years and quarterly reports for the last five

years, current reports and other useful information for shareholders can also be downloaded

from the same source.

There are no changes to the shareholders’ rights. There have been no major transactions

entered into by the company with persons with whom it acts in concert or in which such

persons have been involved during the relevant period.

ASPECTS REGARDING THE CAPITAL AND MANAGEMENT OF THE COMPANY

There were no changes affecting the capital and management of Aerostar S.A. The company was

not unable to meet its financial obligations during this period.

AEROSTAR’s relations with its parent company, other shareholders and companies in

which it has equity holdings

AEROSTAR is a subsidiary of IAROM S.A. and therefore the parent company consolidating the

financial statements of the group is IAROM S.A., with the unique identification code 1555301

and the registered office in Bucharest, B-dul Aerogării, no. 39. The consolidated financial

statements for the financial year 2022 have been filed with the A.N.A.F. under registration

number 602356101-2023/31.08.2023.

The parent company will prepare and publish a set of consolidated financial statements

in accordance with the applicable accounting regulations for the financial year ended on

31.12.2023.

p. 19

AEROSTAR’s relation with its parent company and the companies in which it has equity holdings

:

Affiliated parties

As on 31.12.2023 AEROSTAR S.A.’s holdings in other affiliated entities are as follows:

Financial information for the last

financial year (year 2022) for

which the financial statements of

affiliated companies have been

approved

SalesEquityNet

(k lei) (k lei) profit

(k lei)

8.63521534

Foar S.R.L. BacăuCAEN code40851%

AEROSTAR’s shareholdings in these companies are recorded at cost. Both companies in which

AEROSTAR holds stakes are registered in Romania. Transactions with related parties are

disclosed in the Financial Statements in Note 26.

Thecompany holds 45,412,207 shares of Evergent Investments S.A., listed on the Bucharest Stock

Exchange. Aerostar accounts for the holding of shares at fair value through other comprehensive

income in accordance with IFRS 9 "Financial Instruments".

The production facilities and capacities of Aerostar S.A. are located at the company’s headquarters

in Bacau, Romania, where the registered office of the company is also located, at no. 9 Condorilor

Street, postal code 600302, at the secondary office without juridical personality and workplace, in

Iasi, at no. 25B Aeroportului Street, and at the secondary office without juridical personality,

workplace, in Fetești, at no. 2 Carpați Street, ap. 7.

The company owns land totalling 48,63 hectares with access to the E85 European road. Aerostar

has direct access to the runway of the "George Enescu" airport in Bacau.

In accordance with the object of activity, facilities are built at the head office and at the

secondary workplaces, which are necessary for the smooth running of the production activities.

The production areas include hangars, industrial halls, technological test benches, administrative

and social areas. The company also has office space for technical and economic activities.

All these spaces are maintained in good order. The built-up area of the buildings is approximately

14,54 hectares.

The assets of Aerostar S.A. comply with the provisions established in the health, safety and

environmental management system, in accordance with the applicable legislation and regulations

on occupational safety, as well as the rules of protection and safety of property.

On 31 December 2023, Aerostar S.A. Bacău owns tangibleassets forthe performanceof its activity

with a gross value of 376.947 thousand lei, materialized in land, buildings, special constructions,

installations, technological equipment, means of transport:

Tangible assets category

Estimated useful life

Real estate investments

12.749

42,77%

25-50 years

Technical installations, of which:

231.12068,24%

·

technological equipment

Other tangible assets

In 2023, no risks were identified regarding the ownership of tangible assets.

p. 21

INFORMATION ABOUT THE AEROSTAR SHARES (ARS)

The shares of Aerostar S.A. Bacău have been traded since 1998 on the regulated market

administered by the Bucharest Stock Exchange.

Main characteristics of the securities issued: 152,277,450 registered, ordinary, fully paid shares of

equal value, issued in dematerialised form and evidenced by registration in the Register of

Shareholders. This register is managed by the Central Depository S.A. Bucharest. The issuer

Aerostar S.A. Bacău is registered with the following data: Unique Registration Code 950531, ISIN

code ROAEROACNOR5, stock exchange symbol ARS, the issued shares being all in the Standard

category.

*) source: monthly bulletin issued by the Bucharest Stock Exchange

During 2023: Aerostar S.A. did not issue bonds or similar securities; there were no subscriptions

for new shares and no participation certificates, convertible bonds, options or similar rights;

there was no share buyback programme.

Aerostar shares-in figures

Nominal value per share (lei)

Price at the end of the period (lei) *)

Stock market capitalisation (lei)

1.332.427.688

1.172.536.365

1.256.288.963

Maximum price (lei)*)

9,50

9,40

Minimum price (lei) *)

7,00

6,35

4,00

Earnings per share (lei)

ENVIRONMENT AND BUSINESS MODEL

AEROSTAR operates in the global market for aerospace and defence products and services as an

independent company.

Committed to a sustainable future, the management has adopted an ambitious strategy and

an integrated business model based on a process-systems approach and RISK-based thinking.

Production activities are carried out under commercial contracts with customers, who

are integrators and/or end-users/beneficiaries in the aerospace and defence industry.

The company’s management policy is focused on maintaining a solid capital base for continued

development in the context of the global market and competitive advantage through quality,

capabilities, high level technologies to support a sustainable and organized development and

thus to achieve strategic objectives.

The company’s business model has not been changed as a result of the international context,

but the way of doing business has been adapted to the specific nature of the business flows.

The contextual aspects and their impact over short, medium and long time horizons, as well as

the company’s priorities in relation to stakeholder requirements over the same time horizons, as

well as the significant risks and opportunities related to the business model, are at the core of

the company’s 5-year Development Strategy. All of these are subject to ongoing risk

management analysis and measures, and are also subject to complex and in-depth analysis

during the annual update of the Company’s strategy.

AEROSTAR continues to act firmly to ensure the sustainability of its business and to keep its

production capabilities unaffected and is focused on ensuring its employees’ health and

safety.

We fully comply with the applicable national and international legislation, acting constantly,

intensively and transparently to pursue growth opportunities and to ensure access to new

aviation and defence programmes.

p. 23

Our sustainability objectives,

OBJECTIVES

linked to the business

environment and global

developments, are

incorporated into the

company’s overall strategy

First-tier supplier

nationwide provider of

maintenance, integrations

and upgrades for defence

systems.

Regional top supplier for

commercial aviation MRO

services.

Significant supplier in

globalised production chains

for structural and landing gear

parts and sub-assemblies.

sustainability aspects

Business development and

increased sustainability in line

with our mission and objectives.

Sustaining the company’s market

position and increasing its

performance.

Meeting customer

requirements and total safety

for our employees.

Promoting the brand as a top

employer, developing it and

raising awareness and

engagement in the community.

THE AEROSTAR STRATEGY

AEROSTAR’s strategy is to increase commitment in all sustainability aspects.

Through the proposed objectives and commitments, the company is channelling its efforts

into achieving its main goal of increasing sustainability by associating profitability with

responsibility, increasing value in the short, medium and long term and thus increasing the

company’s performance. Through the objectives addressed in the company’s strategy,

AEROSTAR aims year after year to exceed its targets by achieving the proposed objectives.

Environmental, social and personnel issues, respect for human rights, fighting corruption and

bribery are a priority for AEROSTAR, therefore relevant data and performance indicators are

communicated in the annual and periodic reports, in line with the company’s best practices,

procedures and policies, following the guidelines of the legislation in force.

Reducing the atmospheric

emissions of greenhouse

gases and VOC emissions;

Reducing the environmental

impact by increasing waste

recovery and educating all

employees to minimise waste

generation in order to improve

the environmental performance;

We respect the environment,

nature and natural resources.1

Training employees in

professional development

and supporting an

inclusive culture where

every employee can reach

their full potential and

contribute with our help,

thus ensuring the

evolution of tomorrow’s

professions;

Improving the quality of

life at the workplace,

ensuring the employees’

health and safety and

maintaining a thriving

social dialogue;

Developing partnerships to

attract young people to

internships and studies;

Improving professional

and social integration.

Sponsorship in support of

sport and culture.

Developing partnerships so

that we can be a benchmark

for our clients;

Strengthening our position

as a strategic player in the

civil and military aviation

industry and creating

sustainable added value;

We uphold the highest

standard of professional

ethics

During 2023, we consolidated the progress of our proposed commitments!

We respect, support and

guarantee equal, non-

discriminatory treatment

through equal

opportunities for all our

employees.

These objectives are listed in the table of key performance indicators on page 49.

p. 25

The quality and environmental management system complies with all relevant regulations

QUALITY AND ENVIRONMENT

and standards and meets the strictest expectations. We therefore use an integrated quality

and environmental management system to ensure that the quality and environmental aspects

are compliant, continuously improved and standardised.

We are certified to the requirements of ISO 9001, the environmental management standard

ISO 14001 and the occupational health and safety standard ISO 45001.

We are also authorised as a Part 145 Maintenance Organisation, a Part 21G Production and

Design Organisation and a Part 21J Production and Design Organisation. Our partnerships

associated with the defence market have led us to implement a quality management system

based on NATO quality assurance requirements AQAP 2110 and AQAP 2210.

In terms of social responsibility and sustainable development, AEROSTAR has set targets in the

environmental area to improve its performance in the areas of pollution prevention, sustainable

use of resources and climate change mitigation, following the guidelines of the SR ISO 26000

standard on social responsibility.

The quality and environmental policy adopted by Aerostar has the following strategic objectives:

meeting our customers’ requirements, complying with the legal and regulatory requirements

applicable to the activities carried out, increasing the environmental performance, ensuring full

safety for the users of Aerostar products and services and continuously improving the

competitiveness of our products and services.

Certifications, Authorisations, Accreditations in 2023

1.Maintained certification of the quality management system - based on the requirements of

EN 9100/ AS 9100D and SR EN ISO 9001/ EN ISO 9001.

2.Maintained certification of the quality management system - based on the requirements of

NATO quality assurance publications AQAP 2110 and AQAP 2210.

3.Maintained the authorisations granted to Aerostar by the Romanian Civil Aviation Authority

for the Maintenance Organisation.

4.Maintained the approval granted to Aerostar by the European Aviation Safety Agency for the

Design Organisation .

5.Maintained the approvals granted to Aerostar by the Civil Aviation Authorities of the United

Kingdom, Turkey, Morocco, USA, Bermuda.

6.Extended the scope of approval granted by the National Military Aviation Authority to

Aerostar as a Military Design Organisation.

The recertification and continued validity of each of these certifications and

authorisations confirms the concern and good practice established in AEROSTAR for risk

management.

p. 26

IMPROVED ENVIRONMENTAL PERFORMANCE

The implementation of the environmental policy and the action guidelines set for the

implementation of the overall management objectives have led to improvements in

the company’s environmental performance.

Aerostar has a dedicated department in charge of verifying the compliance with the

environmental legislation, which coordinates all specific Environmental Protection activities.

AEROSTAR has complied with the environmental legislation as well as the requirements of the

Integrated Environmental Authorisation, the Water Management Authorisation and the

Greenhouse Gas Emission Authorisation. The results of the controls carried out by the

commissioners of the Bacau Environmental Guard confirm AEROSTAR’s compliance with the

applicable legal and regulatory requirements.

Environmentally impactful activities are kept under control through internal operational

controls i.e. by analysing the results of monitoring and measurements carried out in accordance

with the provisions of the environmental permits concerning air emissions, waste generation,

noise generation, spills.

Understanding and addressing our carbon footprint is central to our mission to become a

sustainable business. We aim to comply with all legal regulations so that our actions and

decisions contribute to reducing our carbon footprint.

Every year we analyse our environmental impacts related to: air emissions, noise generation,

spills on land, waste generation, and assess the environmental aspects by determining the

significant issues.

Environmental risks, impacts, opportunities and indicators are presented on pages 51-

53.

SUSTAINABLE USE OF RESOURCES: WATER AND ELECTRICITY

Sustainable use of resources and energy efficiency is an area of continuous consideration in our

company.

Our industrial water needs are met entirely through the exploitation of our own wells. The

technological wastewater resulting from chemical and electrochemical processes is collected

and treated in wastewater neutralisation plants located on the company’s site. The site is not in

the path of torrents and is not in a flood zone.

The total amount of water discharged to the sewer in 2023, relative to turnover, increased

by 11,35% compared to 2022 and decreased by 4,77% compared to 2021.

The streamlining of the thermal agent distribution continued, as well as the increase in the

energy efficiency of the buildings, so that the electricity consumed in 2023, in relation to

turnover, decreased by 30% compared to 2022 and by 54% compared to 2021.

We are going through a climate emergency. Energy efficiency measures, included in

AEROSTAR’s policies as an objective to reduce energy consumption, have materialised in the

p. 27

implementation of a photovoltaic park from our own sources to benefit from green energy. This

way, the company has achieved the objective of increasing sustainability, reducing the effects of

global warming and achieving climate neutrality. These measures have led to a reduction of

approximately 20% in purchased energy.

POLLUTION PREVENTION AND WASTE RECOVERY

Environmentally impactful activities are kept under control through internal inspections (internal

assessments of compliance with applicable environmental legal and regulatory requirements)

and analysis of the results of monitoring and measurements carried out in accordance with the

provisions of environmental permits, as well as through the implementation of the

Environmental Monitoring and Guidance Programme.

Thus, in 2023, the monitoring actions established by the Environmental Permits that Aerostar

holds were carried out, ensuring that the maximum permitted values of the indicators were

met.

In order to reduce the environmental impact, the company is constantly investing in equipment

to contain pollutants. For more information, see the chapter Investments made in 2023, page

43.

The results of the controls carried out during 2023 by the commissioners of the Bacau

Environmental Guard confirm AEROSTAR’s compliance with the applicable legal and

regulatory requirements. The specific measures imposed by them were resolved within

the required timeframe.

Emissions of volatile organic compounds decreased in 2023 by 32,7% compared to 2022 and by

50,6% compared to 2021, thus continuing the actions to replace solvent-based paints with

water-based paints.

We monitor both hazardous and non-hazardous waste, recover it and transfer it through

an authorised recycling company in accordance with legislation.

All categories of waste are managed in accordance with the specific legislative requirements. All

waste generated from the activities carried out within the company is stored separately in

Emissions of Volatile Organic Compounds (VOCs)

25000

p. 28

containers and subsequently handed over to authorised operators for collection, recovery

and disposal.

In 2023 the amount of recoverable waste represented about 90% of the total amount of

waste generated by the company’s activities, (45,8% more waste recovered than in 2022 and

121% more waste recovered than in 2021).

All waste generated from the activities carried out within the company is stored selectively in

suitable containers and then handed over to authorised operators for collection, recovery

and disposal. Waste management has also been subject to inspections by the Environmental

Protection Commissioners, without any violations of the legislation in this field.

The total amount of waste generated in 2023 has increased due to the sanitisation of the

premises and the scrapping of obsolete work equipment.

REACH compliance requirements

All hazardous chemicals and preparations used in AEROSTAR are managed in accordance with the

applicable regulations in force. Hazardous chemical substances and preparations covered by the REACH

Regulation are used in accordance with the conditions of the authorisations issued by the European

Waste generated during the period2019-2023

recovered wastewaste disposed of

total waste generatedtotal hazardous waste

p. 29

CLIMATE CHANGE MITIGATION

AEROSTAR has complied with all obligations under the Greenhouse Gas Permit.

No non-conformities were documented as a result of the verification audit on greenhouse

gas emissions management and therefore the emissions for 2022 were validated.

The atmospheric emission values measured in 2023 proved to be below the maximum allowable

value set out in the applicable legislation in force.

ASSESSMENT OF IMPACT ASPECTS OF THE ACTIVITY

With regard to the assessment of business impact aspects, AEROSTAR acts responsibly,

efficiently and continuously to ensure compliance with the applicable legal and regulatory

requirements and the contractual requirements in the relations with its customers.

Within the company, training of employees to raise their awareness of the need to comply

with the environmental requirements is a constant preoccupation.

WE RESPECT THE ENVIRONMENT, NATURE AND NATURAL RESOURCES!

We see climate change as both a challenge and a threat to the environment, with social and

economic impacts. It can lead to uncertainties for planning, investments and strategies.

Regulations and legal requirements also evolve in an attempt to encourage green

behaviour.

We believe that everyone’s efforts must be consistent. We also believe that action on

climate change mitigation and energy efficiency will pay off in the long run.

Respect for the environment is at the heart of sustainable behaviour. To this end, we

monitor greenhouse gases and carry out comparative analyses with the previous years, set

actions to reduce consumption and make investments that will be a benefit in the long term.

We remain committed to protecting the natural resource base, to using water and

energy responsibly, to reducing greenhouse gas emissions, to reducing waste from

operations, to reducing the use of chemicals, materials and processes that have a

negative effect on the

environment, and, to improving and developing company sites in ways that avoid negative

environmental impacts.

We see improvements in our indicators from one year to another. This can only be achieved by

honouring our commitment. We are committed to communicating our environmental policy

and strategy to all stakeholders and where possible to go beyond the requirements of the

applicable regulations and standards.

Table 1.5 A comparative overview of environmental indicators

Sustainable use of resources

Pollution prevention and

(*) in relation to turnover

Amount ofElectricityNatural gasReduction

AEROSTAR, A TOP EMPLOYER

Since people are the key to transformation, evolution and progress, AEROSTAR attaches

particular importance to the integration of young people and the continuous professional

development of its employees.

In order to encourage young people to take part in internships and studies and subsequently to

get hired, AEROSTAR invests in the creation of long-term partnerships to strengthen ties with

the regional and national educational institutions. Among AEROSTAR’s main priorities are the

implementation of agreements with both vocational and technical pre-university institutions and

higher education institutions, with a view to setting up classes and/or groups in specialisations of

interest for the company.

To help attract the most talented people, AEROSTAR promotes its employer brand in

educational institutions and on social media and strengthens its position as a top employer

by meeting its strategic objectives.

To this end, we advocate for an inclusive culture in which everyone can realise their potential

and contribute their individual perspectives. We are convinced that the diversity of our

workforce and our organisational culture have a positive impact on business success and the

evolution of our company.

We are committed to strengthening our culture and the diversity of our workforce by recruiting,

retaining and professionally developing our employees, and by developing partnerships to

attract young people to internships and studies.

We take action against all forms of discrimination, build teams with a balanced age structure and

a diverse base of educational backgrounds and experience, and create a balanced work

environment. Our competency model shows how managers and employees can establish a

suitable environment through open collaboration and support.

We are fully committed to ensuring business continuity while protecting the health and safety

of our colleagues.

During 2023 a total of 3.895 people (including pupils, students, employees and their families)

visited AEROSTAR.

SOCIAL AND PERSONNEL ASPECTS

We are committed to supporting employees, their professional development, recruitment

and retention in the organisation through the preoccupations included in the development

and performance appraisal strategy.

Through the human resources policies adopted, we ensure equal opportunities for all

employees, without discrimination, in terms of professional career or any other component of

the work relationships.

p. 32

The principle of equal treatment of all employees applies in the framework of employment

relations in the company, and any direct or indirect discrimination against an employee aimed

at denying, restricting or eliminating recognition of the use or exercise of rights provided for by

labour law and the Collective Labour Agreement, based on sex, sexual orientation, age, race,

ethnicity, religion, political option, social origin, disability, family situation or responsibility,

trade union membership or activity is prohibited.

On 31.12.2023, AEROSTAR had a workforce of 1846 employees.

168 employees are in management positions.

Recognizing the importance of employment in stable conditions for employees and equally for

the local community, AEROSTAR continuously seeks to improve professional and social

integration, currently having 87% of individual employment contracts concluded for an

indefinite period, 94 employees through temporary employment agent Airpro Consult S.R.L.

The cumulative staff turnover (voluntary departures from AEROSTAR and Airpro Consult

S.R.L.) for 2023 was 12.73%, down from the previous year.

EMPLOYEE BENEFITS

For the year 2023, the Collective Bargaining Agreement for the period 01.04.2022 - 31.03.2024

included a benefits package covering the dynamic needs and requirements of employees and

wage increases of 15,5%.

The levels of remuneration, by professional category, are established during the process

of negotiation of the Collective Labour Agreement through pay scales.

The level of remuneration is also determined through the process of negotiating individual basic

salaries, depending on the professional category to which the employee belongs according to

the pay scales, as well as on the specific nature of the work he/she carries out, the complexity,

difficulty, importance, responsibility and category of work he/she performs.

EMPLOYEES’ HEALTH AND SAFETY, AN ORGANISATIONAL CULTURE

During the reporting period, no fatal accidents at work were recorded in AEROSTAR. Aerostar

acts consistently to reduce the risks of accidents and illnesses and applies internal rules and

regulations in its work that ensure compliance with legal requirements. During 2023 there were

no employees with occupational diseases and no dangerous incidents.

Periodically, all the organisation’s employees are trained in occupational health and safety,

reminding them of the risks of occupational injury and illness, the rules of occupational health

and safety and the measures to be taken to avoid the occurrence of events.

In order to identify non-conformities and deficiencies generating risk for the occupational safety

and health of employees, audits and internal controls are regularly carried out.

p. 33

Our Occupational Health and Safety Management System is certified according to SR ISO

45001:2018. The Occupational Health and Safety Management System is applicable to the entire

company’s own workforce as well as to the non-employees.

DIVERSITY AND INCLUSION

Fully aware that diversity and inclusion are powerful drivers of stability, creativity and

performance AEROSTAR through its policy promotes equal opportunities and fights all forms of

discrimination.

The percentage of women in the management structure is

27%. The percentage of women newly hired in 2023 is 19,83%.

The ratio between the average basic wage negotiated for male employees and the average basic

wage negotiated per company was 1,029 while the ratio between the average basic wage

negotiated for female employees and the average basic wage negotiated per company was

0,930.

GENDER AND AGE DIVERSITY

In terms of gender distribution, given AEROSTAR’s object of activity, 29% of the staff are women.

45% are employees between 31 and 50 years old, 21% are employees under 20 years old and

34% are employees over 50 years old.

SOCIAL DIALOGUE

The Collective Labour Agreement 2022 - 2024, concluded between the company’s management

and the social partners, includes the Code of Conduct and Ethics which stipulates the general

guidelines for conducting the company’s business in accordance with the highest standards of

business ethics.

As a voluntary process involving negotiation, consultation and information between the social

partners (with a view to establishing agreements of common interest, social dialogue, based

on mutual trust, promptness, and transparency) is regulated in the Collective Labour

Agreement.

There is an ongoing consultation process with the workers’ representatives and the

representative trade union on the actual and potential impacts on their workforce.

We recognise the importance of social dialogue and always respect the employees’ right to join

trade unions and to benefit from collective bargaining. The average degree of unionisation in

the company in 2023 is 60,62%, slightly down compared to 2021.

Aerostar has regulated by Internal Rules the procedure for dealing with requests, proposals,

complaints or individual complaints from its employees. The Collective Labour Agreement

contains regulations on the protection of persons submitting requests, complaints or claims,

including workers’ representatives, against reprisals.

p. 34

PREPARING OUR EMPLOYEES FOR THE FUTURE! TRAINING, EDUCATION AND PROFESSIONAL

DEVELOPMENT

Knowledge transfer and competency development are strategic objectives that support our

company’s evolution. Incentivising employees, participation in training at all levels as well as

strategic training contribute to day-to-day operational excellence.

We are committed to supporting our employees and their professional development, as well as

to recruiting and retaining them in our organisation through the preoccupations included in our

development strategy and performance evaluation.

To this end, we are constantly concerned with increasing the level of training and professional

development of our employees, regardless of the starting level of our new employees: recent

graduates of educational institutions or employees with extensive experience, but who need

further training to keep up with the latest technologies.

Aerostar has a budgeted Annual Professional Training Plan. During 2023, a total of 1.870

employees benefited from continuous training.

In order to reduce the number of unskilled workers, Aerostar has started the process of setting

up the Centre for Assessment and Certification of Professional Skills obtained through non-

formal channels. Three target trades of major interest to the company have been chosen and

candidates who go through the assessment process will acquire certificates of professional

competence in the chosen trades. This Assessment and Certification Centre will also enable other

candidates in the local community to acquire certificates of competence.

PRINCIPLES AND VALUES, HUMAN RIGHTS, FIGHTING CORRUPTION AND BRIBERY

Aerostar’s activities are conducted in accordance with the highest international standards

of business, honesty and integrity.

AEROSTAR S.A. respects and guarantees equal and non-discriminatory treatment in the

relationship with its employees, partners, collaborators and customers. The company’s staff

behaves professionally, transparently and impartially ensures diversity and equal opportunities

in relation to all stakeholders, avoiding any action that could be interpreted as an act of

discrimination. AEROSTAR respects the Universal Declaration of Human Rights.

In AEROSTAR there are no incidents of work-related discrimination based on gender, race or

ethnic origin, nationality, religion, disability, age, sexual orientation or other relevant forms of

discrimination or incidents of harassment.

EMPLOYEESGENDER DIVERSITYAGE DIVERSITY

Employees included in

professional training

A RESPONSIBLE RELATIONSHIP WITH THE VALUE CHAIN

We are an open system organisation, whose functions are influenced by the context in which

we operate, so that strategy, objectives, as well as the estimated outcomes, are determined by

analysing the contextual aspects - external or internal to the organisation - as well as the stated

requirements or the expectations identified in relation to the stakeholders.

Our company has included in its Organisational and Operational Rules both the relevant

organisational context aspects and the stakeholders’ requirements and expectations, identified

in relation to the common interests: customers, investors, suppliers, employees, authorities,

certification bodies, technical and regulatory authorities, local community.

The information on the stakeholders is systematically monitored and analysed and the results of

the analyses serve as the basis for the annual update of the company’s 5-year Development

Strategy. The priority objectives for the immediate future, derived from the updated strategy

and set at the highest management level, lie at the basis of the preparation of the annual

business plans by business areas: development-investment, quality-environment, training,

marketing, occupational health and safety, production. Thus, both the strategy and the annual

activity plans are dynamic and, depending on the context, adapt to the stakeholders’

requirements and expectations.

SUPPLY/PROCUREMENT CHAIN

Through its policies, Aerostar ensures that it aligns to internationally recognised instruments

relevant to the workers in the value chain, including the United Nations (UN) Guiding Principles

on Business and Human Rights.

AEROSTAR requests its suppliers, through contractual requirements, to comply with the labour

laws applicable in the country of origin.

AEROSTAR works with suppliers from countries that are members of the International Labour

Organisation (ILO), a United Nations organisation that sets international labour standards,

develops labour policies and promotes decent working conditions for all workers.

The Supplier Code of Conduct represents the expectations we have from our suppliers to

ensure a healthy business relationship in accordance with our values, principles and ethical

standards.

If the expectations of this code are not met, the business relationship may be reviewed

and Aerostar may propose corrective action to the terms of the contract(s).

Suppliers are encouraged to implement, in writing, their own Codes of Conduct and to cascade

them to their main suppliers of goods and services.

Supplier performance monitoring is carried out by using the measurement of

performance indicators, which have also been communicated to suppliers.

p. 37

Aerostar has also defined in its General Purchasing Conditions some specific requirements for

the suppliers regarding ethics and compliance with the labour legislation.

No social criteria were used for the selection of suppliers and no negative social impact was

generated in the supply chain.

CONSUMERS AND END-USERS

Full safety for the users of our products and services is one of AEROSTAR’s strategic objectives.

Aerostar aims to have a diversified portfolio of final programmes in which it is a supplier with a

well distributed range of products and geographical markets.

Given the production concentration in the large global aviation supply chains, a continuous

growth of the customer and programme portfolio, as well as of the product portfolio, is the

guarantee of a solid market position.

Aerostar’s actions are therefore aimed at continuously adapting the management system to

respond effectively to the changing global market, allocating responsibilities and roles

appropriately in relation to these changes, and ensuring an inclusive organisational culture

for adherence to the necessary measures.

In terms of product and service safety, there have been no reported events as a result of

AEROSTAR’s activity in relevant areas such as maintenance of civil and military aircraft,

production of parts and sub-assemblies for civil aviation, production of radio-electronic

equipment.

Products and services are executed in full compliance with customer and user requirements and

legal and regulatory requirements in order to respect the health and safety of users.

Furthermore, we are authorised based on the audits carried out by the

certification/accreditation bodies and our customers.

Where chemical substances and preparations are restricted for use, we only use

chemical substances and preparations under the conditions permitted by the REACh

Regulation.

In terms of product and service safety, no events occurred in 2023 as a result of AEROSTAR’s

activities.

p. 38

OUR CUSTOMERS’ SATISFACTION

Our customers’ trust and satisfaction depend on our commitments to offer quality products

and services, competitive cost and on-time delivery.

We adhere to the highest standard of professional ethics, honesty and integrity. We also ensure

transparency and access to information by regularly publishing relevant financial and operational

information, press releases and general information on the company’s website.

We continually strive to develop our partnership relationships so that we can be a benchmark

for our clients and anticipate their expectations.

LOCAL COMMUNITY

The local community together with our customers, investors, suppliers, employees, authorities,

certification bodies, technical and regulatory authorities are stakeholders for whom our

company has identified the following relevant requirements or expectations:

- Partnership on public interest projects;

- Sponsorship and support for public events.

Also, given their particular importance in providing the most important resource - human

resources - educational institutions are considered distinct stakeholders, in fact assimilated to

communities, namely: the pupil community, the student community, the teaching community

and the scientific community. For these, the company has identified the following relevant

requirements or expectations:

- recruitment commitments;

- internships;

- sponsorships for the educational process;

- partnerships on research and development projects.

Given the management system adopted, based on the process-systemic approach and risk-based

thinking, our company did not experience any negative impacts on communities in 2023. In the

light of our previous positive experiences, the know-how acquired and developed in the company,

we will continue to improve our methods and tools in order to closely and systematically monitor

the results of our work, to detect risks early on, to assess impacts and to identify and implement

the necessary corrections and improvement measures in a timely manner.

The most significant impact of our company on society and communities is represented by the

safe local employment opportunities we offer as an employer with high economic potential and

the tax revenues we contribute, which have a decisive effect in improving the living standards of

community members.

p. 39

However, through our policies we aim to do more than that, we strive to influence our

communities in a positive way by getting involved and returning benefits to them such as:

engaging in public interest partnerships with the local authorities; contributing to the

education and training process, collaborating with the educational institutions and engaging in

joint projects for the development and adaptation of young people to the current demands of

the economic agents and business environment; sponsoring various events or public initiatives

etc.

In the spirit of our vision to positively influence the communities by getting involved and giving

them back some of our results, we collaborate with the local authorities, industrial employers’

organisations, associations, foundations and other non-profit organisations, secondary schools,

colleges and universities, cultural and sports institutions.

At the same time, we support the community of small entrepreneurs by supporting the

activities carried out by the County Patronage of SMEs (PJIMM) Bacău, where we disseminate

our positive experiences for the purpose of shared interests.

We also maintain dialogue with other communities relevant to the company, such as the

aviation business community.

We collaborate with non-profit organizations in the interest of knowledge and promotion of

cultural, historical and educational values, of strengthening the professional prestige of workers

in the aviation industry, of reinforcing the spirit of belonging to the group of elite manufacturers

in the leading fields of industry in Romania and elsewhere in the world.

Aware of the benefits of culture and sport in the educational process, as well as of the positive

impact of cultural and sporting events in the community, we sponsor the "Aerostar Bacău

Cultural and Educational Association" - a non-profit organization with its own legal personality,

as well as the Aerostar Sports Association, under which a professional football club and a model

airplane club operate. The Aerostar football club, as well as the aeromodelling club, are open to

any talented children or young people from the community.

Our company is involved in humanitarian or charitable activities, either directly or by

encouraging and supporting donations from our employees for such purposes. Thus, in 2023

the following initiatives were carried out with our involvement:

- The campaign "Donate and save a life!" - a blood donation campaign with the support of the

Blood Transfusion Centre Bacău team. The campaign brought together a number of 40

employees from the company as donors, with the help of which approximately 16 liters of blood

were donated, so much needed for people in distress;

- The campaign "Donate a book!" - a campaign to donate books for disadvantaged children. With

the dedicated support of the company’s employee volunteers, more than 500 books were

collected, which ended up in the library of the primary school in Soci village, Pâncești Commune,

Bacău.

p. 40

In the same spirit of meeting the expectations of the local communities, our company is

authorized to organize qualification courses in four trades specific to the aviation industry.

RESEARCH/DEVELOPMENT PARTNERSHIPS

During 2023 AEROSTAR and INCAS have set up a partnership to develop an aircraft for the

General Aviation.

The aircraft will be named IAR 835 in terms of the IAR family of aircraft and is intended to be a

light, economical, 1200kg maximum take-off weight (MTOW), four-seat, single-engine, high-

wing aircraft designed to perform both self-flight and school and training flights, air taxi,

business, tourism, airmail and mapping, and can be operated both day and night in instrument

flight rules (IFR) conditions.

INCAS carries out the conceptual design, aerodynamics and testing activities and AEROSTAR

covers the process design activities and the necessary toolings and fixtures (SDV) and produces

the test specimens and the prototype.

INVESTMENTS MADE IN 2023

With a responsibility to employees and the community to build a sustainable future, AEROSTAR

invests for sustainable goals. The quality of the products delivered is essential and also

dependent on the human factor and on the technical equipment.

As a result, in 2023 we continued to invest in equipment needed both in civil aviation

maintenance, military aviation, manufacturing and for increasing our laboratory capabilities

through the acquisition of modern, high-precision equipment.

At the same time, the policy of improving the working conditions for our employees and the

technological processes was continued, by upgrading the fume suction line in the Electroplating

Workshop and by installing an air cooling system in both the painting booths and the work areas

in the Paint Shop. This investment was also aimed at reducing the emission of atmospheric

pollutants, thereby resulting in an improved air quality.

Furthermore, the upgrading of the wastewater neutralisation plant in the same workshop

was continued.

p. 41

In 2023, AEROSTAR S.A. made investments amounting to 19.329 thousand lei. The summary of

the investment expenditure is shown in the table below:

Category

Realised in 2023- thousand

lei

Development expenditure

Measuring and control equipment and installations

Means of transport

Intangible

Furniture, appliances, office equipment

Category of capital expenditure

Realised in 2023-

thousand lei

Pollution prevention and treatment

~3.390

AEROSTAR’s investment policies are aimed at ensuring sustainable development as well as

sustainable use of resources and reduction of the environmental footprint, supporting professional

excellence, assuring efficiency and optimising workflows.

p. 42

CORPORATE GOVERNANCE INFORMATION

As a company listed on the Bucharest Stock Exchange, AEROSTAR S.A. aims to comply with the

principles and recommendations set out in the Corporate Governance Code of the Bucharest

Stock Exchange adopted on 11 September 2015.

At the same time, AEROSTAR’s Corporate Governance System is in accordance with the

provisions of the company’s articles of association and complies with the provisions of Laws no.

31/1990 and 24/2017, Regulation no. 5/2018 of the Financial Supervisory Authority.

The implementation of corporate governance rules ensures a transparent decision-making

process, based on clear and objective rules designed to increase shareholders’ confidence in

the company. AEROSTAR S.A. pays particular attention to corporate governance, analysing the

level of compliance with the provisions of the Corporate Governance Code issued by the

Bucharest Stock Exchange, which came into force on 4 January 2016.

CORPORATE GOVERNANCE STRUCTURES

The corporate governance structures are as

follows:

Shareholders - General Meeting of

Shareholders

Board of Directors

Audit Committee

Executive and operational management

General meeting of shareholders

The procedure for organising and holding general meetings of shareholders is published on the

website www.aerostar.ro/Investor relations/Reference documents.

To ensure equal treatment and the full and fair exercise of the shareholders’ rights, the

Company makes available to them all relevant information on the OGM and the decisions taken,

both through the regulated means of communication (national newspaper, reports to the FSA

and the BVB) and in the special "Investor Relations" section open on its own website, easily

identifiable and accessible.

AEROSTAR uses its best efforts, in compliance with the requirements of the relevant legislation,

to facilitate the participation of shareholders in the work of the General Meetings and the full

exercise of their rights. Shareholders may attend and vote in person at the General Meeting, but

they may also vote by proxy or by post.

The General Meetings of Shareholders were held in full compliance with the provisions of Law

31/1990 on companies, Law 24/2018 on the capital market and the applicable regulations

issued by the Financial Services Authority (FSA), as well as any other applicable legal rules.

In recent years, the company has distributed dividends to shareholders and has consolidated

a dividend policy that ensures shareholder satisfaction, as well as resources for the

company’s development.

In accordance with the applicable legal provisions, the request for payment of dividends

approved by the General Meeting of Shareholders ceases to have effect after the expiry of

a period of three years from the " date of payment " of dividends for each financial year.

p. 43

In AEROSTAR S.A., the Board of Directors determines the strategic orientation and ensures its

Board of Directors

implementation. At the same time, the Board of Directors is also responsible for ensuring

compliance with all applicable legal provisions, its own internal regulations and for the proper

management and control of risks.

The Board of Directors of AEROSTAR S.A. was elected for a period of four years at the General

Meeting of Shareholders held on July 9, 2020. The election was done by secret ballot, with a new

term of office of 4 years starting from July 11, 2020 until July 10, 2024.

On 31.12.2023 the structure of the AEROSTAR Board of Directors was as follows:

TONCEA MIHAIL NICOLAE

Thus, during 2023, AEROSTAR’s Board of Directors was composed of 5 directors, two of whom

held executive positions in the Company and three of whom were non-executive members.

Responsibilities of the Board of Directors

The Board of Directors conducts its business in accordance with the Constitutive Deed and the

Internal Regulations of the Board of Directors. The Board meets at least once every 3 months or

whenever circumstances so require. The agenda of the meetings respects the role and duties of

the Board in accordance with the law and the Constitutive Deed.

The Board of Directors is responsible for setting the company’s major operations and

development directions, including those related to sustainability matters. It approves

the Sustainability Report and delegates to the executive management the achievement

of sustainability objectives and targets and closely monitors this activity.

The Board is also responsible for the accounting and financial management system and the

income and expenditure budget, and adopts the financial plan for the current year.

p. 44

Remuneration policy for members of the Board of Directors

The remuneration policy for the Board members is based on the following key principles:

(a) To contribute to the successful implementation of Aerostar S.A.’s strategy in the short,

medium and long term;

(b) To ensure appropriate shareholder involvement in setting the remuneration policy

and monitoring its implementation;

(c) To contribute to promoting the mission and values of Aerostar S.A.;

(d) To prevent situations of conflicts of interest;

(e) To provide the necessary and flexible tools to remunerate the directors commensurately

with their responsibilities, skills and performance;

(f) To ensure compliance with the applicable legal requirements.

For the work carried out within the Board of Directors, each Director is entitled to a fixed

monthly remuneration, the net amount of which is approved by the OGMS upon

appointment and subsequently, annually, with the approval of the income and expenditure

budget.

There are no incentive schemes or remuneration policies related to aspects of sustainability

in place for the Board members.

The Remuneration Policy is published on the Aerostar S.A. website (www.aerostar.ro) and will

remain available to the general public for the duration of the Remuneration Policy.

Eleven meetings of the Board of Directors were held in 2023.

There is no agreement, understanding or family relationship in relation to the appointment

of directors of the company. There have been no acts of resignation or dismissal among the

members of the Board of Directors or the auditor.

There is no dispute between the company and the directors regarding their activity. None of the

directors has been involved in a dispute or other administrative procedure with AEROSTAR in the

last 5 years.

Executive - operational

management

AEROSTAR is managed on a unitary basis, with delegation of the executive management of the

company to the General Director and the Financial Director.

In relation to the organisation and management system of AEROSTAR S.A., the management

structure at operational level ensures the management of activities on the basis of a divisional

organisation, based on management centres for production, auxiliary activities and functional

activities.

Executive management is exercised by the General Manager and the Financial Director. The

management structure at executive-operational level is completed by the other division and

directorate directors.

p. 45

The direct participation of the executive management in the company’s share capital is less

than 1%. There are no disputes with the above-mentioned persons.

Audit Committee

Based on the provisions of the Corporate Governance Code in conjunction with the provisions of

Law no. 162/2017, an independent audit committee consisting of three members appointed by

the General Meeting of Shareholders on 13 August 2020 was established.

The duties of the Independent Audit Committee are those set out in its own Operating Rules,

approved by the Board of Directors, supplemented by the provisions of Law no. 162/2017 and

EU Regulation no. 537/2014, which can also be found on www.aerostar.com/Investor

Relations/Reference Documents.

The Audit Committee meets on a regular basis, at least four times a year, as well as on an

exceptional basis if necessary.

The independent auditor: The shareholders of AEROSTAR S.A. approved by unanimous valid votes

(secret ballot) the appointment of Auditeval Consulting S.R.L. as financial auditor and the entering

into a financial audit contract for a minimum period of 1 (one) year. On 17.05.2023, the contract

was extended for a period of 3 years.

Internal control system

AEROSTAR’s internal control system comprises the following components:

Management accounting and control

AEROSTAR has a department that carries out the tasks of management accounting and control.

It ensures the inventory of all assets, liabilities and equity items on the company’s books. The

inventory activity has been carried out throughout this period in compliance with legal

provisions and regulations. The results of the inventories were recorded in the company’s

accounts. There were no significant differences from the bookkeeping records.

Budgetary control

Budgetary control is carried out by budget officers. In terms of budgets, the company is

Budgets are defined in the company based on activity programmes corresponding to

the company’s functions.

Budget control ensures:

that each budgeted indicator is within the planned values

substantiation of any corrective actions

p. 46

On a quarterly basis, both the profit and the cost centres report to the executive management

on their compliance with the budgetary provisions and on the required, timely, efficient,

effective and legal nature of the expenses the company incurs.

Controlling

In AEROSTAR the concept of controlling has been implemented and is continually developed as a

superior stage of budgetary control. Controlling also ensures alignment with the company’s

mission and strategic objectives.

Internal audit

The company has an Internal Audit Department with members registered with the Chamber of

Financial Auditors of Romania. AEROSTAR has organized the internal audit activity according to

the law, in a separate department in the organizational structure, according to the

organizational chart.

The internal audit department reports directly to the Board of Directors and is an independent

and objective assurance and consulting activity designed to evaluate and improve the

company’s operations.

The internal audit activity is carried out on the basis of the Annual Activity Programme approved

by the Board of Directors.

The internal audit missions have confirmed the positive impact of the internal audit activity on

AEROSTAR’s business.

The Internal Audit Department regularly submits internal audit reports at the meetings of

the Board of Directors and to the Audit Committee.

CODE OF PROFESSIONAL CONDUCT AND ETHICS IN AEROSTAR

AEROSTAR upholds the company’s principles and values honestly, fairly and with integrity and

consistently pursues the highest standards of business ethics, voluntarily adopting the

AEROSTAR Code of Business Conduct and Ethics for many years.

This code is posted on the company’s website www.aerostar.ro and is part of the provisions

of the collective labour agreement.

Insofar as this Code requires a higher standard than that required by trade practice or

applicable laws, rules or regulations, we adhere to those higher standards.

This Code is binding on our directors amd employees and is adopted in all matters concerning

our employees as well as our investors, customers, suppliers, local community representatives

and other business partners.

The Board of Directors pays special attention to the observance of corporate

governance principles in order to ensure:

achievement of performance against the background of sustainable development of

the company;

accuracy and transparency of the company’s decision-making process;

respect for the shareholders’ rights and fair treatment by protecting and enforcing

transparency and access to information through regular publication of relevant financial

and operational information.

Details on the compliance with the principles and recommendations set out in the

Corporate Governance Code of the Bucharest Stock Exchange are presented as an integral

part of this report.

POLITICAL INFLUENCE AND LOBBYING ACTIVITIES

Aerostar has not made any political donations and has not implemented any lobbying actions.

At the same time, none of the members of the Board of Directors or the management and

supervisory bodies held a comparable position in public administration (including the regulatory

authorities) during 2023.

FIGHTING CORRUPTION AND BRIBERY

In 2023, there were no reported concerns or requests for counseling regarding unethical or

illegal behavior and organizational integrity in our company, no incidents of corruption, no

employees dismissed or sanctioned for acts of corruption, and no incidents of corruption leading

to the termination or refusal to renew contracts with business partners.

MANAGEMENT OF CONFLICTS OF INTEREST

In terms of accounting regulations, AEROSTAR is a subsidiary of IAROM S.A. AEROSTAR has

disclosed the shareholding structure of the company and its affiliated parties in accordance

with the applicable regulations.

AEROSTAR also complies strictly with the requirements of Law 129/2019 in relation to

beneficial owners. In relation to the materiality thresholds set out in the specific capital

market legislation, no data is available on the cross board membership or shares held by

suppliers and other stakeholders in AEROSTAR’s shareholding structure. The performance

evaluation of the members of the Board of Directors is carried out in accordance with the

provisions of the Internal Regulations of the Board of Directors.

Following the assessment carried out, based on these statements, it was found

that: o no member of the Council is an independent member;

o no member is in conflict of interest with the position held on the Board of Directors;

o no measures or changes in the Board of Directors are required.

p. 48

Corporate Governance Code Compliance Table 2023

Reason for non-compliance

Three out of five board members are non-executive. The Board of Directors does not

have an independent member and is voted in this structure by the General Meeting of

During 2023 a total of 11 meetings were held of which:

- 8 meetings were attended by all the members of the Board;

- At 3 meetings 3 members were present and the other 2 were absent;

The company has set up an independent audit committee in accordance with Article

65 of Law no. 162/2017.

The members of the Audit Committee are independent persons elected by the OGMS.

and have competence in accounting and statutory audit.

All OGMS decisions on remuneration of the members of the Board of Directors have

been published.

There is now a separate section in the BoD Rules.

The information in this section is available on request but is not published on the

Performance indicators

We continuously monitor the progress of the proposed commitments!

1.

CLIMATE CHANGE MITIGATION

Reducing atmospheric greenhouse gas emissions

Reducing emissions of volatile organic compounds

Down by 32%

Down by 26,5

%

Increasing the percentage of waste recovery

Up by 46%

Up by 51%

Reducing electricity consumption / producing electricity from

renewable sources

Down by 24%

Down by 19%

Total amount of water discharged to sewerage

Up by 11,4%

Down 14,5%

34 training hours/employee.

Professional development training for employees

(number of internal and external training hours/employee per year)

Ensuring employees’ health and safety (number of accidents per 100,000

hours worked)

Diversity and Inclusion/Percentage of women in Aerostar

Percentage of women in the management structure

3. COMMUNITY INVOLVEMENT AND DEVELOPMENT

Developing partnerships to attract young people in

internships and studies

Individual employment contracts concluded for an indefinite period

Performance indicators in line with the strategic objectives presented on page 24.

p. 50

MANAGEMENT OF IMPACTS, RISKS AND OPPORTUNITIES

In Aerostar, risk, impact and opportunity management is a continuous process that is carried

out to assess risks and address them, to identify new risks that have not previously occurred, to

reassess persistent risks and to evaluate opportunities for growth and expansion.

Within the company resources are allocated as necessary for risk management, authorities and

responsibilities are established for the relevant functions and levels. The overall framework for

dealing with risks is based on an understanding of the needs and expectations of the

stakeholders in achieving the organisation’s forecasted results.

The contextual issues and their impact over time horizons - short, medium and long, as well as

the company’s priorities in relation to stakeholder requirements over the same time horizons, as

well as the significant risks and opportunities related to the business model, lie at the heart of

the company’s 5-year Development Strategy. All of these are subject to ongoing risk

management analysis and measures, as well as to a complex and in-depth analysis during the

annual update of the Company’s strategy.

The analysis of contextual issues involves an assessment of impacts by levels of relevance

(extreme/medium/low), and a correlation with the analysis of the stakeholders’ requirements,

arranged by levels of priority (extreme/medium/low). From among the requirements relevant

to stakeholders as well as to the local community, the company strategy considers the

following ones with "extreme" priority level:

- local workforce prioritised - used; -

protected environment;

- business ethics and respect;

- job stability and retention.

The company’s strategy is one of sustainable development and selective growth, with turnover

as the main objective.

Failure to achieve the forecasted turnover could represent an impactful risk in case of

materialisation, affecting all stakeholders, including the communities within the company’s

sphere of activity. If the forecasted turnover is not achieved, the risk of restricted activity or even

failure to ensure the continuity of the business would become very likely and would result in

impactful phenomena such as: loss of jobs, decrease in tax contribution, decrease in investment

funds, decrease or absence of sponsorship funds.

To manage this major risk, the company continuously gathers feedback from the organisation,

the environment and its stakeholders and adjusts its processes accordingly. The result is an

annual update of the Strategy so that it always covers a 5-year horizon.

p. 51

In order to manage the major risk of failure to achieve the forecasted turnover, the company

constantly takes actions based on the generic cycle Plan - Do - Check - Update, covering both the

general framework of the strategy and the current activities. The production activity dashboard is

the tool through which the company’s top management monitors the results against the

approved budget and planned targets, detects and analyses in real time the risks of non-

realisation of production and sales and can identify timely and effective remedial measures.

Other tools used are Management Reports. The management report analyses turnover,

productivity and value-added rates, resource management, quality and environmental aspects,

commitments made and related risks, resulting in measures to correct or improve

organisational performance.

Improvement is planned, with recommendations and measures set out in specific action

plans. Improvement actions are stepped up through appropriate information and

communication and overall monitoring is exercised through the internal control system with

the following components: management accounting and control, budgetary control,

managerial control, internal audit.

Other significant risks are also identified which contribute to the adaptation of the strategy

according to changes in the contextual aspects and the assessment of impacts, risks and new

opportunities, such as: for example, the decline in profitability and image depreciation, which are

detailed in the operational plan, among others, in the following risks:

- risk of environmental damage;

- risk of lack of resources, in particular lack of qualified human resources; -

risk of increased security, safety and mobility of the workforce.

In the hypothetical situation of materialisation of the risk of environmental damage through the

company’s activity, this would induce a negative entail a negative impact on the people living or

working around the company’s headquarters, factories and workplaces. In this regard, the

company has adopted a robust policy in the field of quality and environment, and it has

implemented and maintains an Environmental Management System, which complies with the

requirements of the SREN ISO 14001 standard, being certified in accordance with this standard.

Making sure that the environmental policy and objectives are consistent with the company’s

context and strategic direction is one of the specific actions leading to ensuring the

effectiveness of the environmental management system and its improvement.

In order to manage the risk of environmental damage, we continuously strive to maintain

the SREN ISO 14001 Environmental Management System certification implemented in the

company. This is integrated with the Quality Management System, so from a management

perspective we ensure that we have a positive impact on society, communities and the

environment, our objectives in this regard being:

- to achieve products and services that provide complete safety for their

users; - to increase the environmental performance.

p. 52

This system is continuously monitored by the certifying authority through surveillance audits,

during which any non-conformities are identified and recommendations are made, which are

closed with root-cause analyses, followed by corrective action and improvement plans, where

appropriate. The company monitors the status of their achievement through the Quality-

Environment Scoreboard, which is drawn up and reviewed weekly.

The risk identified in the company of not having a skilled human resource and the risk related to

security, safety and increased mobility of the workforce, actually generate opportunities and a

positive impact for the local and regional community, as it is expected that the workforce is

primarily sought in these communities. At the same time, these risks also lead to varying degrees

of dependence on communities, in particular the pupil community, the student community and

the teaching community. The necessary human resource, estimated for a 5-year horizon, is an

important component of the Strategy and an integral part of it.

In order to manage and take advantage of the opportunity to provide the community with

secure and well-paid jobs, the company is constantly working to popularize its activities and

values, to strengthen and promote its image as a top employer, to identify and implement

specific HR marketing methods and means to create solid recruitment pools in the local

community and in the immediate vicinity from which to select new employees.

At the same time, after hiring, the company carries out intensive training activities for both

new and existing employees, which are actions to mitigate the company’s risk of not having an

adequately qualified human resource.

We systematically monitor HR issues through the HR Report, which is submitted monthly and

reviewed by the company’s top management. The training activity and the budget allocated are

also subject to the Management Report, similar to profit centre management reports.

Looking ahead, the company’s management aims to secure medium and long-term sustainability

and to mitigate the uncertainty associated with its strategic objectives, and focuses on mitigating

the consequences in terms of economic and financial imbalances.

The exposure to other types of risks is presented in Note 18 -Financial Instruments.

p. 53

WE ARE COMMITTED TO BUILDING A SUSTAINABLE FUTURE!

We fully comply with the national and international standards and regulations, applicable to

the environmental, social and personnel aspects, human rights, fighting corruption and bribery,

promoting diversity.

The current global context has not altered our commitment and has not impacted on

the company’s compliance with its responsibilities.

In our company, the Board of Directors determines the strategic direction and ensures its

implementation and the Executive Operational Management closely coordinates the work of

the departments responsible for economic, environmental and social issues accordingly.

In our company:

The responsibilities for quality and environmental aspects, as well as Risk Management, are

assigned/delegated to the Quality and Environmental Manager.

The responsibilities for social aspects, personnel, occupational health and safety, anti-

discrimination and promoting diversity are assigned/delegated to the Human Resources

Director; as an area of interference, these responsibilities relate to:

The responsibilities for legal compliance, human rights, anti-corruption and anti-bribery issues

are assigned/delegated to the Legal Office.

The responsibilities for sustainable resource use issues, reduction of natural resource

consumption are assigned/delegated to the Director of Infrastructure and Utilities Division.

The responsibilities for compliance measures in relation to the avoidance of money laundering

are assigned to the Director of Finance and Accounting.

The responsibilities related to corporate governance are assigned to the company’s

General Secretariat.

The regulatory framework established by AEROSTAR for compliance is based on:

* AEROSTAR’s Management System, Quality and Environmental Management System and

Occupational Health and Safety Management System respectively, certified in AEROSTAR

according to the requirements of ISO 9001, ISO 14001, AS EN 9100, AQAP 2110 and ISO

45001:2018 standards respectively.

* The AEROSTAR customers’ requirements

* The guidelines described in the international standard ISO 26000

* The regulatory framework provided by Romanian legislation

* The environmental legislation, the requirements of the Integrated Environmental

Authorisation, the Water Management Authorisation and the Greenhouse Gas Emissions

Authorisation.

The Annual Report for the period 1 January - 31 December 2023 is prepared in accordance with

the framework set out in Law 24//2017, ASF Regulation No. 5/2018 on issuers of financial

instruments and market operations- Annex 15, applicable reporting requirements and the

Guidelines described in the European Commission Communication. The Annual Report is

accompanied by the Statement on non-financial reporting issues, the "Apply or explain"

statement of compliance with the Corporate Governance Code of the Bucharest Stock Exchange

and the Individual Financial Statements of Aerostar.

SUMMARY OF FINANCIAL STATEMENTS 2023

p. 54

COMPLIANCE WITH NON-FINANCIAL REPORTING REQUIREMENTS

Financial performance

Non-financial reporting requirementsPage

Section in the Annual Report

General requirements

Business model27

The company’s approach to sustainability12

Strategy23-24

Environmental information

Policy on quality and environmental issues25-30

Mitigating climate change

Improving pollution prevention performance

Sustainable use of resources

Social information

Personnel aspects. Own workforce31-35

Affected communities and social issues

Value chain information

Consumers and end-users

Governance information

Risk and opportunity

management

Corporate governance42-48

Professional conduct46-47

Risk and opportunity management50-53

COMPANY FINANCIAL STATEMENTS FOR

THE YEAR ENDED ON 31 DECEMBER 2023

Prepared in accordance with

Order of the Minister of Public Finances No 2844/2016, for the approval

of the Accounting Regulations in accordance with the International

Financial Reporting Standards

TABLE OF CONTENTS

COMPANY STATEMENT OF PROFIT OR LOSS

OTHER COMPREHENSIVE INCOME

COMPANY STATEMENT OF FINANCIAL POSITION

COMPANY STATEMENT OF CASH FLOWS

COMPANY STATEMENT CHANGES IN EQUITY

AEROSTAR S.A. BACĂU COMPANY

STATEMENT OF PROFIT OR LOSS

(unless specified otherwise, all amounts are stated in thousand lei)

Income from stocks of finished goods and production in

Income from the production of fixed assets

Income from operating subsidies

Total operating income

Expenses on employee benefits

Expenses on depreciation of fixed assets

5;6;20(25.946)

(24.105)

Net income (expenses) from current asset adjustments

20(14.760)

(11.678)

Net income (expenses) from provision adjustments

2027.240

2.054

Expenses on external benefits

Material expenses

Total operating expenses

Profit/loss from operating activity79.79183.379

Financial profit/loss

17.16516.292

Profit before tax

96.95699.671

Tax on current and deferred profit

17;23

(3.928)(9.398)

Net profit of the period

93.02890.273

President of BoD

COMPANY STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED ON 31 DECEMBER 2023

(unless specified otherwise, all amounts are stated in thousand lei)

Net profit for the period

Deferred income tax recognised on account of

company equity

Fair value revaluation of equity instruments through

other comprehensive income

Gain transferred to retained earnings on sale of

company equity instruments through AECP

Other comprehensive income

(7.370)

4.890

Total comprehensive income for the period

85.658

95.163

President of BoD

COMPANY STATEMENT OF THE FINANCIAL POSITION

(unless specified otherwise, all amounts are stated in thousand lei)

Property, plant and equipment6

Investment property 6

Rights to use assets under lease 32

Fixed financial assets 7

Receivables on deferred income tax 17

Total non-current assets

Trade receivables and other receivables8;9;18

Current corporate tax receivables 23

Short-term prepaid expenses 31

Cash and cash equivalents 11

COMPANY EQUITY AND LIABILITIES

Result carried-forward12

Reserves12

Deferred income tax recognized on equity17

Distribution of profit for legal reserve12

Total company equity

12

Long-term liabilities

Liabilities regarding deferred income tax17

Subsidies for long-term investments 14

Other long-term liabilities 16

Total long-term liabilities

Long-term provisions

13

Current liabilities

Trade liabilities15;18

Current corporate income tax liability23

Prepaid income31

Subsidies for short-term investments14

Other current liabilities16

Total current liabilities

Short-term provisions

13

Total provisions

Total liabilities

Total company equity, liabilities and provisions

COMPANY STATEMENT OF CASH FLOWS

(DIRECT METHOD)

(unless specified otherwise, all amounts are stated in thousand lei)

CASH FLOWS FROM OPERATING

cash collected from customers

tax and excise recoveries from the State Budget

3.851

6.478

subsidies received from the State Budget

617

98

payments to suppliers

(310.714)

(255.241)

payments to employees

(106.194)

(88.857)

payments of taxes, contributions and duties to

the State Budget

(74.449)

(70.752)

payments of profit tax to the State Budget

NET CASH FROM INVESTMENTS

27(6.516)

(70.719)

NET CASH FROM OPERATING

CASH FLOWS FROM INVESTING

interest income from bank deposits

proceeds from sale of financial fixed assets

proceeds from non-reimbursable funds

dividends received from other entities

dividends received from affiliated entities

payments for purchase of financial fixed assets

payments for purchase of property, plant and

equipment and intangible assets

CASH FLOWS FROM FINANCING

gross dividends paid

NET CASH FROM FINANCING

Net increase/decrease in cash and cash

equivalents

Cash and cash equivalents at the beginning

of the period

Effect of exchange rate changes on cash and

cash equivalents

Cash and cash equivalents at the end of the

period

President of BoD

COMPANY STATEMENT OF CHANGES IN COMPANY EQUITY

unless specified otherwise, all amounts are stated in thousand lei

(

A. Balance on 1 January 2023

Profit for the period

Other comprehensive income

Set up of deferred income tax recognised as company

Allocation of the profit for the financial year 2022 to

the uses decided by the shareholders at the OGMS on

20 April 2023 (Note 12)

Allocation of the profit made in 2023 to tax relief

reserves, in gross amounts

27.924

(27.924)-

Gain transferred to retained earnings on sale of equity

instruments through other comprehensive income

(727)80174

Revaluation at fair value of equity instruments through

other comprehensive income

(3.839)(3.839)

Transfer to reserves of retained earnings representing

surplus from revaluation reserves

Total comprehensive income for the period

Reserves distributed from the profit of 2022

Dividends distributed for 2022

Transactions with shareholders recognised directly

in equity

B. Balance on 31 December 2023

C. Changes in equity (Note 12)

* The result on 31.12.2022 is 90.273 thousand lei and is influenced by the distribution of profit on other reserves from tax facilities in the amount of 7.961 thousand lei; **

The result on 31.12.2023 is 93.028 thousand lei and is influenced by the distribution of profit on other reserves from tax facilities in the amount of 27.924 thousand lei;

President of BoD and General Director,

Vice President of BoD and Financial Director,

COMPANY STATEMENT OF CHANGES IN EQUITY FOR

THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(all amounts are stated in thousand lei

Other elements of comprehensive income

Setting up of deferred income tax recognized in

Distribution of the profit of the year 2021 on the

destinations decided by the shareholders at the AGM

of 20 April 2022 (Note 12)

54.280

(54.280)

Fair value revaluation of equity instruments through

other comprehensive income

7.235

Allocation of profit made for tax relief reserves in

Transfer to reserves of retained earnings representing

surplus generated from revaluation reserves

Comprehensive income of the period

Reserves distributed from 2021 profit

Dividends distributed for 2021

Transactions with shareholders recognised

directly in equity

B. Balance on 31 December 2022

C. Changes in equity (Note 12)

*) The result of 59.940 thousand lei on 31.12.2021 is influenced by the distribution of profit to other tax relief reserves in the amount of 5.660 thousand lei;

**) The result 90.273 thousand lei on 31.12.2022 is influenced by the distribution of profit to other tax relief reserves in the amount of 7.961 thousand lei;

President of the Board of Directors,Vice-President of the Board of Directors and Financial Director,

Grigore Filip Doru Damaschin

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 1 - DESCRIPTION OF THE COMPANY

AEROSTAR was established in 1953 and operates in accordance with the Romanian law.

AEROSTAR S.A. performs its activity at its registered head office located in Bacau, 9, Condorilor

Street, code 600302. In accordance with the Resolution no. 2/14.12.2017 of the Board of Directors,

the opening of a secondary place of business without legal personality (workplace) located

in Iasi, on 25B Aeroportului Street has been approved.

The main field of activity of AEROSTAR is production.

The main object of activity of the company is “Manufacture of aircraft and spaceships” - code

3030.

The company was registered as a shareholding company at the Bacău Trade Register (under

number J04/1137/1991), with the current name “AEROSTAR S.A.” and the unique identification code

950531, the European Unique Identifier (EUID) code ROONRC J04/1137/1991.

The company is listed on the Bucharest Stock Exchange under the ARS code, and the record

of its shares and shareholders is kept, as provided bylaw, byS.C. Depozitarul Central S.A. Bucharest.

During the year 2023, there was no subscription of new shares, nor any participation

certificates, convertible bonds, warranties, options or similar rights.

In terms of accounting regulations, AEROSTAR S.A. is a subsidiary of the company IAROM

S.A. and, therefore, the parent company that consolidates the financial statements of the group is S.C.

IAROM S.A., with the unique identification code 1555301, having its registered head office in

Bucharest, at number 39, Aerogării B-d. The consolidated financial statements for the financial year

2021 were submitted to A.N.A.F. under registration number 429231916-2022/30.08.2022. Copies of

the consolidated financial statements can be obtained from the head office of the parent company,

IAROM S.A. The parent company will prepare and publish a set of consolidated financial statements

in accordance with the applicable accounting regulations, for the financial year ended on 31.12.2023.

The company has a sole segment of activity in accordance with IFRS 8 and no distinct financial

information is available for various components of the entity. The information regarding the sales by

categories of products and markets is detailed in the Board of Directors’ Report.

The company’s policy is focused on maintaining a solid capital basis in order to support the

continuous development of the company and the achievement of its strategic objectives.

The companywill continue to act decisivelyto ensure the sustainabilityof its investments and

the preservation of its production capabilities. Moreover, thanks to the experience gained within our

team, the company acts towards finding the most appropriate solutions to the new economic

challenges.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 2 - ACCOUNTING ESTIMATES, ASSUMPTIONS AND

JUDGEMENTS

2.1. Estimates

The preparation and presentation of the individual financial statements in accordance with

IFRS involves the use of estimates, judgements and assumptions that affect the implementation of the

accounting policies as well as the reported value of the assets, liabilities, revenues and expenses.

The estimates and judgements are made based on the historic experience as well as on a series

of factors considered adequate and reasonable. The accounting estimates and judgements are

continuously updated and take into account reasonable expectations with respect to future probable

events. The reported accounting values of the assets, the liabilities that cannot be determined or

obtained from other sources are based on these estimates considered adequate by the Company’s

management.

Such estimates, as well as the reasoning and assumptions behind them are reviewed on a regular basis

and the result thereof is recognized in the time period when the estimate was reviewed. Any change

in the accounting estimates will be recognized prospectively by its inclusion in

the result:

of the period of time when the change occurs, if it affects only that period of time; or

of the period of time when the change occurs and of the subsequent periods, if the change

also affects such periods.

The Company uses estimates in order to determine:

the uncertain customers and the adjustments for impairment of related receivables;

the value of the provisions for risks and expenses to set up at the end of the period (month,

trimester, year) for litigations, for the dismantling of property, plant and equipment, for

collaterals granted to customers, for obligations toward manpower and other obligations;

the adjustments for impairment of property, plant and equipment and intangible assets. At

the end of each reporting period, the Company estimates whether there are indications of

impairment. If such signs are identified, the recoverable amount of the asset is estimated

to determine the extent of impairment (if any).

the lifetimes of property, plant and equipment and intangible fixed assets. The Company

reviews the estimated life of the tangible and intangible fixed assets at least at the end of

each financial year to determine their adequacy.

the stocks of raw materials and materials requiring the setting up of depreciation

adjustments;

Disclosure of information

deferred taxes.

The Company will, to the extent practicable, disclose the nature and value of a change in an

accounting estimate that is effective in the current period/future periods.

2.2. Errors

Errors may arise in the recognition, evaluation, presentation or description of items in the

financial statements.

The Company retroactively corrects the significant errors of the prior period in the first set of

financial statements approved for issue after the discovery of such errors by:

restating the comparative values for the prior period presented in which the error

occurred, or

if the error occurred before the prior period presented, by restating the opening balances

of assets, liabilities and equity for the prior period presented.

(unless specified otherwise, all amounts are stated in thousand lei

In case of identifying an error, the Company presents the following information: -

the nature of the error for the previous period;

for each previous period presented, to the extent possible, the correction value:

for each affected line item in the financial statement;

for basic and diluted earnings per share.

the correction value at the beginning of the first previous period presented;

if retrospective restatement is impracticable for a specific prior period, the circumstances

leading to the existence of that condition and a description of how and when the error was

corrected.

2.3. Changes in the accounting policies

Changes to the accounting policies are only permitted if they are requested by IFRS or if they

result in more relevant or reliable information about the Company’s operations.

The Company modifies an accounting policy only if such change: -

is required by an IFRS; or

-results in financial statements that provide reliable and more relevant information with

reference to the effects of the transactions, of other events or conditions on the financial

performance or cash flows of the entity.

Application of changes in the Accounting Policies:

-the entity takes into account a change in the accounting policy that results from the initial

implementation of an IFRS in accordance with the specific transitory provisions, if any, of that

IFRS; and

-at the initial application of an IFRS that does not include specific transitory provisions.

Disclosure of information

When the initial application of an IFRS has an effect on the current or prior period of time, the

Company discloses in the explanatory notes the following:

the title of IFRS;

the nature of the accounting policy change;

when applicable, the fact that the change is made as an effect of the transitory dispositions

and a description of these transitory provisions;

for the current period and for each prior period, the sum of adjustments for each affected

element of the statement of the financial position, to the extent possible.

When it is impossible to determine the specific effects for one or more prior accounting periods, the

Company will apply the new accounting policy of assets and liabilities for the first period for which

the retroactive application is possible, which may also be the current period.

When a voluntary change in the accounting policy has an effect on the current or prior period, the

Company discloses in the explanatory notes:

- the nature of the change of accounting policy;

- the reasons for which the application of the new accounting policy provides more reliable

and relevant information;

- forthe current period and foreach prioraccountingperiod, the estimated sumof adjustments

for each affected item of the statement of the financial position, as far as possible.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 3 - ACCOUNTING AND EVALUATION PRINCIPLES

3.1. Bases for the preparation and presentation of the financial statements

The individual financial statements of Aerostar S.A. are prepared in accordance with the provisions

of:

the International Financial Reporting Standards (IFRS) adopted by the European Union;

Changes in accounting policies and adoption of revised/amended IFRS:

1. Entry into force of IFRS 17 "Insurance Contracts" which introduces a new international

approach to accounting for insurance contracts. IFRS 17 applies to all types of insurance

contracts issued as well as certain guarantees and financial instruments with discretionary

participation;

2. Amendments to IAS 1 "Presentation of Financial Statements" replacing the IAS 1

requirement to present "significant" accounting policies with a requirement to present

"material" accounting policies;

3. Amendments to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors"

The changes introduce a definition of accounting estimates i.e. monetary amounts in financial

statements that are subject to measurement uncertainty, unless they result from the correction

of a prior period error. The amendments also clarify what changes in accounting estimates are

and how they differ from changes in accounting policies and error corrections;

4. Amendments to IAS 12 ’Income Taxes’ specify how entities should account for deferred tax

assets and liabilities arising from a single transaction;

The changes take effect for the annual reporting periods beginning on or after 1 January 2023. These

changes did not have a material impact on the Company’s Financial Statements.

Standards ( Changes to Standards) and interpretations adopted by the International

Accounting Standards Committee:

5. Amendments to IAS 1 ’Presentation of Financial Statements’. The amendments relate to the

classification of liabilities as current or non-current liabilities and the presentation of

accounting policies;

6. Amendmentsto IFRS16 ’Leases’which areintended to improvethe requirements that aseller-

lessee uses in measuring lease liabilities arising from a sale and leaseback transaction under

IFRS 16;

7. Amendments to IAS 7 and IFRS 7 introducing disclosure requirements for vendor financing

arrangements;

8. Amendments to IAS 21 ’Accounting for Foreign Currency Transactions’ that clarify when

acurrencyis considered exchangeable into anothercurrencyand how an entityestimates a spot

rate for currencies that are not exchangeable;

The amendments are effective for the annual reporting periods beginning on or after 1 January 2024,

subject to adoption by regulation by the European Commission. The Company assesses the potential

effects of the new Standards and amendments to International Financial Reporting Standards and based

on initial estimates, it forecasts that they will not have a material impact on its Financial Statements.

(unless specified otherwise, all amounts are stated in thousand lei

European Sustainability Reporting Standards (ESRS) adopted by the European

Union:

The Delegated Regulation (EU) 2023/2772 of the Commission of 31 July 2023 supplementing the

Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting

standards requires large companies, small and medium-sized companies with securities admitted to

trading on regulated markets in the EU and parent companies of large groups to include in a dedicated

section of the directors’ report or the consolidated directors’ report the information necessary to

understand the Company’s impact on sustainability matters. This should also include the information

needed to understand how sustainability matters affect the Company’s development, performance and

position. Companies should prepare this information in accordance with the sustainability reporting

standards. Aerostar S.A. must apply these sustainability reporting standards for the financial year

beginning 1 January 2024.

Accounting Law no. 82/1991, republished, as subsequently amended and supplemented;

O.M.F.P. no. 881/2012 on the application of International Financial Reporting Standards by

companies whose securities are admitted for trading on a regulated market;

O.M.F.P. no. 2.844/2016 on the approval of the Accounting Regulations conforming to the

International Financial Reporting Standards, as subsequently amended and supplemented;

OM.F.P. no. 2.861/2009 for the approval of the Norms regarding the organization and

execution of inventories of items such as assets, debts and own capital;

O.M.F.P. no. 1.826/2003 on the approval of the Explanatory Memorandum regarding certain

organizational and leading measures for management accounting;

O.M.F.P. no. 2.634/2015 on the financial accounting documents, as subsequently amended and

supplemented.

Theaccountingis kept in Romanian and in the national currency. Theaccountingof operations carried

out in foreign currency is kept both in national currency and in foreign currency. The financial year is

the calendar year. Financial statements are drawn up and reported in thousands of lei and all values are

rounded to the nearest thousand lei. Due to rounding, the numbers presented do not always accurately

reflect the totals provided and the percentages do not always accurately reflect absolute figures.

The financial statements are drawn up on the basis of historical cost.

The financial statements are presented in accordance with the requirements of IAS 1 Presentation of

Financial Statements. The Company has opted for a presentation by nature and liquidity within the

statement of financial position and a presentation of income and expenses by nature within the

statement of profit or loss, considering that these methods of presentation provide information that is

relevant to the Company’s situation.

(unless specified otherwise, all amounts are stated in thousand lei

3.2. Accounting policies applied

Aerostar SA describes the accounting policies it applies in the notes to the individual financial

statements and avoids repeating the text of the standard unless it is considered relevant to the

understanding of the contents of the note.

The most significant accounting policies are presented below:

Accounting Policies regarding property, plant and equipment

The Company has chosen as its accounting policy the cost model. After recognition as an asset,

property, plant and equipment is accounted for at cost less accumulated depreciation and any

accumulated impairment losses.

The depreciable amount is allocated on a systematic basis over the useful life of the asset and

represents the cost of the asset less the residual value.

Given the specific nature of the business and the types of fixed assets in the Company assets, the

residual values of the fixed assets were considered to be insignificant. In practice, the residual value has

been calculated at the level of the countervalue of recoverable scrap metal, after deduction of

dismantling, disassembly and sale expenses.

The depreciation methods and useful lifetimes are reviewed at least at each financial year end and

adjusted accordingly. The useful lifetimes are determined by committees made up of the Company’s

specialists. Any change to them is accounted for prospectively.

Subsequent expenditures related to an item of property, plant and equipment are added to the carrying

amount of the asset when:

- they result in an improvement of the initial technical parameters;

- they are sources of future economic benefits materialised by additional cash flows in excess of

those originally estimated; and

- they can be measured reliably.

Benefits are obtained directly by increasing the revenues and indirectly by reducing the maintenance

and operating costs.

All other repair and maintenance expenses made to ensure the continued use of the property, plant and

equipment are recognised in the statement of profit or loss when they are made. They are made in order

to maintain the initial technical parameters.

The spare parts are generally accounted for as inventories and recognised as expenses when used up. If

the spare parts and service equipment, having significant values, can only be used in connection with an

item of property, plant and equipment, they are recognised as property, plant and equipment if the

original purchase value (when put into service) of the replaced part can be determined.

In deciding whether to recognise separate components, each case is analysed individually based on

professional reasoning.

The property, plant and equipment under construction to be used in production or administrative

activities is presented in the statement of financial position at cost less any accumulated impairment

loss. Such assets are classified in the respective categories of property, plant and equipment when they

are completed and ready for use in the manner intended by management for the stated purpose.

The management of the Company has set a ceiling for the capitalization of assets of 2.500 lei. All

acquisitions below this amount will be considered as expenses of the period.

Exceptions: Computers are considered to be depreciable property, plant and equipment irrespective of

their entry value and will depreciate over their useful lifetime as determined by the Receiving

Committee. Furthermore, the work tools and devices are accounted for as inventories and recognised

(unless specified otherwise, all amounts are stated in thousand lei

as expenses of the period when they are used up, irrespective of their entry value, taking into account

the fact that they have a useful lifetime of normally less than one year as well as their degree of

specialisation (they are intended to be used for a specific type of product/service).

In the case of internally generated intangible assets, the implementation phases are clearly separated,

namely:

Research phase. Research costs are treated as expenses of the period;

Development phase. Development costs are recognised as an intangible asset if the

following conditions are demonstrated:

- technical feasibility of completing the asset so that it is available for use or sale;

- availability of adequate resources - technical, financial, human - to complete the development; -

intention to complete and use or sell the intangible asset;

- ability to use or sell the asset;

- how the asset will generate future economic benefits; -

ability to assess the costs.

If the Company cannot distinguish between the research and the development phase of an internal

project to create an intangible asset, the Company shall treat the costs of the project as incurred

exclusively in the research phase.

The Company has chosen as its accounting policy the cost model that requires intangible assets to be

valued at net book value equal to their cost less the accumulated depreciation and any impairment

losses recorded in relation to those assets.

An investment property is initially valued at cost, including any other directly attributable expenses.

After the initial recognition, the Company has opted for the cost-based model for all its investment

property in accordance with the provisions of IAS 16 for that model.

Transfers to and from the investment property category are made if and only if there is a change in its

use.

Transfers between categories do not change the carrying amount of the property transferred, nor do

they change the cost of that property for the purpose of assessment or disclosure.

Investment property depreciates according to the same rules as property, plant and equipment.

In the category of financial fixed assets, the following are recorded: -

Shares held in affiliated companies;

- Other non-current securities;

-Long-term loans and the interest thereon. This category includes amounts granted to third

parties under contracts on which interest is charged in accordance with the law;

-Other fixed receivables and related interest. This category includes collaterals, deposits and

securities deposited with third parties, and claims relating to leasing contracts.

Financial fixed assets are classified on initial recognition as subsequently valued at amortised cost,

fair value through other comprehensive income (OCI) or fair value through profit or loss, as

appropriate.

The classification of financial assets on initial recognition depends on the contractual cash flow

characteristics of the financial asset and the entity’s business model for managing them.

•Accounting policies for inventory items

The entry of inventories is recorded in the accounts at the date of transfer of risks and benefits.

Thecalculation of those stocks which arenot usuallyfungibleand of those goods, products or services

is determined by specifically identifying their individual costs.

(unless specified otherwise, all amounts are stated in thousand lei

When stocks and fungible assets are disposed of, they are valued and entered in the accounts using

the FIFO method.

Periodically, the Company’s management approves the level of normal technological losses.

Inventory accounting is kept quantitatively and by value, using the perpetual inventory method.

Value adjustments are made for current assets in the form of inventories for each reporting period,

based on the maturity of the inventories, the findings of the inventory committees and/or profit centre

managers, in order to present the assets at the lower of cost and net realizable value.

•Accounting policies on company liabilities

The Company’s liabilities are recorded in the accounts payable. Accounts payable to suppliers and

other payables shall be kept by category and by individual natural or legal person.

Income tax payable/receivable is recognised as a liability to the extent of the amount unpaid.

Excise duties and special funds included in prices or tariffs are entered in the accounts on the

corresponding accounts payable without going through the revenue and expenditure accounts.

Transactions which cannot berecorded separatelyin the correspondingaccounts and forwhich further

clarification is required are recorded in a separate account 473 "Settlement of transactions awaiting

clarification".

Foreign currency payables are recorded in the accounts in both RON and foreign currency.

A liability is classified as a short-term liability, also referred to as a current liability, when:

it is expected to be settled in the normal course of the Company’s operating cycle, or

o it is due within 12 months of the balance sheet date.

All other liabilities are classified as long-term liabilities.

Liabilities that are due in more than 12 months are long-term liabilities.

They are also considered long-term interest-bearing liabilities even when they are due within 12

months of the date of the financial statements if:

a) the original term was for a period longer than 12 months; and

b) there is a refinancing or rescheduling agreement that is entered into before the date of the

financial statements.

•Accounting policies for company receivables

Receivables include:

- trade receivables, which are amounts due from customers for goods sold or services rendered in

the normal course of business;

- trade notes to be collected, instruments of third parties; -

amounts due from employees or affiliated companies;

- advance payments to suppliers of fixed assets, goods and services; -

Receivables are recorded on an accrual basis, in accordance with the legal or contractual provisions.

Customer accounts are kept by category (internal customers, services and products, and external

customers, services and products) and by individual natural or legal person.

Receivables in foreign currency, resulting from the Company’s transactions, are recorded in the

accounts both in lei and in foreign currency.

Transactions in foreign currency are initially recorded at the exchange rate communicated by the

National Bank of Romania on the date of the transaction.

The derecognition of time-barred debts shall be carried out only after all legal steps have been taken

to settle them.

(unless specified otherwise, all amounts are stated in thousand lei

Doubtful receivables shall be entered separately in the accounts in account 4118 Doubtful customers

when the due date laid down in the contract has been exceeded by more than 30 days or a dispute has

arisen with the customer.

In the annual financial statements, receivables are valued and stated at their probable collectible

amount.

When a receivable from a customer has not been collected in full when due as stated in the contract, an

allowance for impairment is recorded at the times and percentages approved by the Board of Directors

in the Accounting Policy Manual.

•Accounting policies on revenue recognition

Revenue is recognised in the Company’s profit or loss statement when an increase in future economic

benefits associated with an increase in an asset or a decrease in a liability can be measured reliably. As a

result, revenue recognition occurs simultaneously with the recognition of an increase in assets or a

decrease in liabilities.

Revenue includes both amounts received or receivable on own account and gains from any source.

Revenue is classified as follows:

Revenue from operations;

Revenue is recognised on an accrual basis.

Financial revenue;

Synthetic revenue accounts are developed on analytical accounts, according to the accounting

regulations in force (general chart of accounts) and according to the Company’s own needs, with the

approval of management.

Revenue is valued at the fair value of the consideration received or receivable. Sales revenue is

diminished for returns, trade discounts and other similar rebates.

Revenue from operations includes:

- revenue from sales related to contracts with customers (of goods, services, merchandise, residual

products);

income from the production of fixed assets;

- income from the reversal of asset adjustments or from the reduction or reversal of provisions; -

other revenue from operations.

Revenue from contracts with customers is recognised in accordance with IFRS 15 ’Revenue from

contracts with customers’. A customer is a party that has entered into a contract with the Company to

obtain goods and services arising from the Company’s regular activities.

Revenue recognition describes the transfer of control over goods and services to customers, and the

measurement of revenue reflects the consideration to which the Company expects to be entitled in

exchange for those goods and services.

Such control includes the ability to prevent other entities from determining the use of the asset and

deriving benefit from it. The benefits of an asset are the potential cash flows that can be obtained

directly or indirectly from using, selling or holding the asset.

(unless specified otherwise, all amounts are stated in thousand lei

Revenue recognition is the result of going through the following five phases:

1. Identifying the contract with a customer

The Company recognises a contract with a customer only if the following conditions are met:

a) the parties have approved the contract and agree to honour their obligations,

b) the Company can identify the rights of each party with respect to the goods and services

transferred,

c) the Company can identify the terms of payment for the goods and services transferred,

d) the contract has commercial substance(i.e. itchanges the risk, timingand amountof the entity’s

future cash flows)

e) it isprobable that the Companywill collect the consideration to which it is entitled in exchange

for the goods and services transferred to the customer. This involves assessing the customer’s

ability and intention to pay the consideration when due.

2. Identification of obligations arising from the contract

A contract includes obligations to transfer goods or services to a customer. An obligation to transfer a

good or service is separable if it satisfies all of the following conditions:

(a) the customer can benefit from the transferred good or service separately or in combination

with other resources at its disposal; and

(b) the entity’s promise to transfer the good or service to the customer is identifiable separately

from other promises in the contract.

The Company has not identified any types of contracts with separable obligations. In the case of

performance guarantees, theyarenot an additional serviceand as such theydo not represent aseparate

obligation.

3. Determination of the transaction price

The Company must determine the amount of consideration to which it expects to be entitled in

exchange for the goods and services promised in the contract in order to recognise revenue. The price

may be a fixed amount or it may vary due to discounts or other similar items.

The price of the Company’s sales transactions is not adjusted for the effect of the time value of money as

the Company does not have any supply contracts with a settlement term in excess of one year or

containing a significant financing component.

For contracts entered into by the Company, the price is negotiated and remains firm. Renegotiated

contract amendments are effective prospectivelyfrom the date of renegotiation for subsequent orders,

consideringthat the performanceobligation is separate and not part of asingleperformanceobligation

that is partially fulfilled at the date of the contract amendment.

4. Allocation of the transaction price between the obligations generated by the contract

If a contract contains several separate obligations, the Companyallocates the transaction price to each

obligation in proportion to its individual price. The best record for the price of each individual

obligation is the price at which the good or service is sold separately by the entity.

5. Revenue recognition at a point in time or as the Company satisfies the obligation

(unless specified otherwise, all amounts are stated in thousand lei

A contract obligation is met when the control of the goods or services is transferred to the customer.

The control is the ability to decide the use and obtain the majority of the remaining benefits of the

transferred good or service.

The standard establishes how the revenue is to be determined, in that it must be recognised at a point

in time or over a period of time, which applies to both the sale of goods and the rendering of services.

An obligation is met and revenue is recognised over a period of time if at least one of the conditions

below is met:

- the customer receives and consumes the benefits of the service performed by the entity as the

entity performs,

- the performance by the entity creates or improves an asset (for example, work in progress) that

the customer controls as the asset is created or improved,

- the entity’s performance does not create an asset with an alternative use for the entity and the

entity has an enforceable right to payment for performance to date.

If a performance obligation is not fulfilled over time, an entity fulfils the performance obligation at a

specific point in time.

If the Company reasonably expects that the effects on the financial statements for a portfolio of

customers with similar characteristics will not be materially different from those determined by

applying the standard to individual contracts within that portfolio, then the contracts are analysed

together.

The timing of revenue recognition results from correlating the specific contract provisions with the

provisions of IFRS 15.

Rental income

Rental income from investment property is recognised in the profit and loss account on a straight-line

basis over the term of the lease in accordance with IFRS 16.

Finance income comprises interest income, foreign exchange income, dividend income and other

finance income.

Interest income is recognised in the income statement on an accrual basis using the effective interest

method. Interest income arising on a financial asset is recognised when it is likely that an economic

benefit will be obtained by the Company and when that benefit can be measured accurately.

Dividend income from investments is recognised when the shareholder’s right to receive payment has

been established. The Company records dividend income on a gross basis including dividend tax (when

applicable), which is recognised as a current expense.

•Accounting policies on provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result

of a past event, it is likely that the Company will be required to settle the obligation and a reliable

estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the

present obligation at the end of the reporting period, taking into account the risks and uncertainties

associated with the obligation.

(unless specified otherwise, all amounts are stated in thousand lei

Provisions are accounted for by type, depending on the nature, purpose or object for which they are

established.

Provisions for guarantees

The Company establishes provisions for warranties when products or services covered by the

warranty are sold.

The amount of the provision for warranties granted is based on historical, contractual or reasonable

estimates for products/services first performed in the Company.

Provisions for risks and charges

When risks and expenses are identified which are likely to be incurred as a result of events that have

occurred or are in progress and whose purpose is precisely determined but whose realisation is

uncertain, the Company covers these risks by making provisions.

Provisions for risks and charges are made for items such as risks specific to the aviation industry,

litigation, fines, penalties, indemnities, damages and other uncertain liabilities.

Provisions for the decommissioning of tangible fixed assets

On initial recognition of an item of property, plant and equipment, an estimate is made of the costs of

dismantling, removing the item and restoring the site where it is located as a consequence of using the

item over a period of time.

These costs are reflected by the establishment of a provision, which is recognised in the profit and loss

account over the life of the item of property, plant and equipment byinclusion in the depreciation

expense.

The revision of the estimates for the provision for decommissioning and restoration is determined by

the annual review of the dismantling costs. The Company’s committee of experts appointed by internal

decision periodically reviews whether the initial estimates of dismantling costs are adequate.

Provisions for employee benefits

Provisions are recognized for employee benefits granted in accordance with the applicable Collective

Labour Agreement, if and only if:

- the entity has a legal and constructive obligation to make such payments as a result of past

events; and

- a reliable estimate of the obligation can be made.

Provisions are reviewed at the end of each reporting period to reflect the best current estimate.

•Accounting policies for subsidies and other non-reimbursable funds

Subsidies distinctly feature:

-government subsidies;

- non-reimbursable loans as subsidies; -

other amounts received as subsidies.

Subsidies are recognised at their approved amount. Subsidies received in the form of non-monetary

assets are recognised at fair value.

Government subsidies are initially recognised as deferred revenue at fair value when there is reasonable

assurance that it will be received and the Company will comply with the conditions associated with the

subsidy.

Subsidies that compensate the Companyfor expenses incurred arerecognised in the income statement

on asystematicbasisin the same periods in which expenses arerecognised. Subsidies that compensate

(unless specified otherwise, all amounts are stated in thousand lei

the Company for the cost of an asset are recognised in the income statement on a systematic basis

over the life of the asset.

corresponding to the related expenses that these subsidies are intended to compensate.

If subsidies are received in a period in relation to expenditure that has not yet been incurred, the

subsidies received are not income of that current period. They are recognised in the accounts as

deferred income and reversed to the profit and loss account as the expenses they compensate are

incurred.

•Accounting policies regarding the production of goods and services

The organisation of Aerostar SA’s management accounting is based on the applicable legal provisions

and the manual of work procedures and instructions specific to management accounting, adapted to the

specific activity of the Company.

The object of management accounting consists in:

- the collection of direct, indirect and ancillary costs according to their nature; -

the allocation of indirect costs;

- settlement of direct and indirect costs.

The main purpose of management accounting is to establish the result by production or service order

and by organisational structure.

According to the accounting regulations, the cost of goods, works and services performed does not

include the followingitems which arerecognised as expenses of the period in which theyareincurred:

a) losses of materials, labour or other production costs relating to scrap and sub-activity costs;

(b) general administrative expense.

The calculation method used in Aerostar SA is the job order method.

This method is suitable for individual and series production. The object of recording and calculating

costs under this method is the order placed for a given quantity (batch) of products.

Production costs are collected for each individual order directly (direct orders) or by allocation

(indirect orders).

The actual cost per unit of product is calculated upon completion of the order by dividing the

production costs collected on the related order bythe quantityof products manufactured on that order.

Orders are released at the planned price, as appropriate.

In the case of orders related to export sales, the price is expressed in lei byconverting the currency

at the budgeted exchange rate.

In the application of accounting policies, the Company issues work procedures, orders and

instructions, approved by the executive management.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 4 – TRANSACTIONS IN FOREIGN CURRENCIES

AEROSTAR considers the Romanian LEU as the functional currency and the financial statements are

presented in thousand LEI.

The currency transactions are recorded at the exchange rate of the functional currency on the date of

the transaction.

On the date of the Financial Position Statement, the assets and financial liabilities denominated in

foreign currency are evaluated in the functional currency using the exchange rate, communicated by the

Romanian National Bank, valid at the end of the financial year:

1 USD (American Dollar)

1 GBP (British pound)

The favourable and unfavourable exchange rate differences resulting from the settlement of the assets

and financial liabilities denominated in foreign currency are recognized in the Profit or Loss

Statement for the financial year in which they occur.

Considering that 81% of the turnover registered in the reporting period is denominated in USD and

EUR, while a significant part of the operating costs is denominated in LEI, the foreign exchange rate

variations will affect both its net income and its financial position as expressed in the functional

currency.

In the reporting period, the net currency exposure resulted as a difference between the amounts

collected from the financial assets and the payment of the financial liabilities denominated in that

currency is as follows:

Collected from financial assets

Payments of financial liabilities

Foreign exchange net exposure

14.839

25.688

(1.414)

In 2023, the appreciation of the LEU against the USD by 1,30% and by 0,02% against the EUR

resulted in a financial loss from unfavourable exchange rate differences of 1.100 thousand LEI.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 5 - INTANGIBLE ASSETS: reporting period 31 December 2023

Values on 31 December 2023Values on 1 January 2023

(unless specified otherwise, all amounts are stated in thousand lei

COMPARATIVE FIGURES - INTANGIBLE ASSETS: reporting period 31 December 2022

Values on 31 December 2022Values on 1 January 2022

(unless specified otherwise, all amounts are stated in thousand lei)

The category of intangible assets includes the following classes of assets of similar nature and use:

• Licences

• Other intangible assets

The software programmes are registered under other intangible assets.

The useful lifetimes for the intangible assets are established in years, based on the period of the contract or the service life, as the case may be. The useful

lifetime of the licenses and software purchased or generated internally is 3 years.

Depreciation expenses are recognised in the income statement using the linear method of calculation.

The intangible assets in the balance sheet account as on 31.12.2023 are not depreciated and no adjustments were made for the depreciation thereof.

When determining the gross accounting value of the intangible assets, the company uses the historical cost method.

The value of the completely amortized software licenses on 31 December 2023 and which are still in use is

5.880 mii lei.

All the intangible assets in balance on 31 December 2023 are owned by Aerostar S.A..

The entries of intangible assets were made by:

development of production management IT system - version 3

purchase of software licences

1.643 thousand lei

697 thousand lei

946 thousand lei

During the reporting period there were no licence entries generated internally or acquired through business combinations.

During the reporting period there were no assets classified as held for sale in accordance with IFRS 5.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT: reporting period 31 December 2023

Values on 31 December 2023Values on 1 January

equipment and vehicles

equipment and vehicles

(unless specified otherwise, all amounts are stated in thousand lei

COMPARATIVE FIGURES: PROPERTY, PLANT AND EQUIPMENT: reporting period 31 December 2022

Values on 31 December

Other equipment and office

Technological equipment

and vehicles

(unless specified otherwise, all amounts are stated in thousand lei

Property, plant and equipment are valued at acquisition or production cost less accumulated

depreciation and impairment losses.

These items of property, plant and equipment are amortized by using the linear method.

Amortization expenses are recognized in the profit and loss statement.

The following useful lifetimes are assumed:

- constructions

- technological equipment

- vehicles

- other property, plant and equipment

- investment property

The useful lifetimes are established by committees consisting of specialists from the Company. The

useful lifetimes of the property, plant and equipment are stipulated by the fiscal legislation on assets.

The Companydid not purchase assets from business combinations, nor did it classifyassets for future

sale.

The investment property contains a number of 12 real estate – buildings that are rented to third parties

based on renting contracts.

The value of rental income for this category of fixed assets was 2.621 thousand lei.

On the date of transition to IFRS, the Company estimated and included in the cost of the property,

plant and equipment the estimated costs for their decommissioning at the end of a useful lifetime.

These costs were reflected in the set-up of a provision, which is recorded in the profit and loss

account throughout the lifetime of the property, plant and equipment, byinclusion in theamortization

expense.

The amortization of an asset begins when the asset is available for use and ends on the day when the

asset is reclassified in another category or when it is derecognized.

The amortization does not end when the asset is not in use.

The land and buildings are separable assets, and their accounts are kept separately, even when they

are acquired together.

The land has an unlimited useful life and therefore does not depreciate.

The value of land owned by Aerostar SA is presented at acquisition cost, i.e. the assumed cost that

was recorded at the date of transition to IFRS.

In accordance with the provisions of IAS 36 - Impairment of assets, the Company proceeded to the

identification of any signs of impairment of property, plant and equipment, taking into accopunt the

external and internal sources of information.

(unless specified otherwise, all amounts are stated in thousand lei

Internal sources of information:

The economic performance of the assets is good, all fixed assets that are in operation benefit the

Company.

External source of information:

The indicator that offers information regarding the interest from the investors in the companies listed

on the capital market is the market capitalization with reference to the Company equity (MBR).

indicator MBR-Market to book ratio

Stock exchange capitalization/ company equity

The over-unit value of the MBR indicator is obtained by companies well-listed on the capital market

and that are of interest to the investors.

Tangible fixed assets outstanding on 31.12.2023 are not impaired and no significant impairment

indicators have been identified.

The gross accounting value of the fully amortized property, plant and equipment still in operation on

31 Decembrie 2023 is 96.035 thousand lei.

The revalued value of the buildings of Aerostar SA, for the purpose of establishing the tax on

buildings, on 31.12.2023 is 149.978 thousand lei.

On 31.12.2023 no mortgages were set on the fixed assets owned by Aerostar S.A.

51.446 k lei

Entries of property, plant and equipment, achieved by:

commissioning of technical equipment, hardware equipment, measuring

and control equipment

property, plant and equipment under construction in 2023

17.686

k lei

Outflows of property, plant and equipment, achieved by:

transfer of property, plant and equipment as a result

of the commissioning thereof

derecognition of property, plant and equipment because the Company no

729 k lei

longer expects future economic benefits from their use

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 7- FIXED FINANCIAL ASSETS

A) Investments in affiliated entities registered under cost:

Subsidiary name/

Registered head office

Financial information

related to the year 2022

Aerostar’s shareholdings in the affiliated companies are recorded at cost.

(unless specified otherwise, all amounts are stated in thousand lei

On 31.12.2023, the company recorded no modifications i.e. no increases/decreases as to the shareholding percentage, maintaining the same

influence as in 2022 on the remaining companies in the equity portfolio.

Both companies in which AEROSTAR holds shares are registered in Romania.

B) Investments in equity instruments through other elements of global result:

Value of portfolio at

market price (k lei)

Str. Pictor Aman 94C,Bacău

45.412.207EVER

1,2700

57.674

Registered head office

Evergent Investments S.A.

- main activity

according to CAEN

code 6499

The company holds 45.412.207 shares of the company Evergent Investments S.A, listed at the Bucharest Stock Exchange. Aerostar records the

shares held at fair value through other comprehensive income, in accordance with IFRS 9 “Financial Instruments”. The Company has used the

irrevocable option to designate these equity instruments at fair value through other comprehensive income as these financial assets are held both

for the collection of dividends and for gains on their sale and not for trading. The gain or loss on these equity instruments is recognised in other

comprehensive income, except for the dividend income.

C) Cash contribution to the establishment of the initial patrimony of the association "Cluster of education for sustainable

development C-EDD "

The association was established voluntarilybythe founding members, operating as a Romanian legal person of private law without patrimonial

purpose. The association is non-governmental, non-political, non-profit and independent, not subordinated to any other legal person.

The purpose of the Association is to develop and implement effective mechanisms for public-private dialogue in the field of education, to act as a

space for dialogue and collaboration between the main actors involved in education, to elevate the quality of educational processes and to connect

lifelong learning with the economic environment in order to provide it with qualified human resources for sustainable development. The value of

AEROSTAR’s contribution to the assets of the "Cluster of Education for Sustainable Development C-EDD" is 2.500 lei.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 8 - TRADE RECEIVABLES

TRADE RECEIVABLES, of which:

Adjustments for impairment of receivables –

TOTAL TRADE RECEIVABLES

84.889

80.681

In accordance with the provisions of theAccounting Policies Manual, to cover the non-recovery risk of

the amounts that represent the uncertain trade receivables, the company registers adjustments for the

depreciation of the uncertain customers as follows:

50% of the value of the receivables not collected on time if the due date is between 30 days and

180 days. On 31 December 2023, the company registered adjustments for depreciation of this

nature in the amount of 179 thousand lei;

100% of the amount of the receivables not collected on time, if the delay is more than 180 days.

On 31 December 2023, the companyregistered adjustments for depreciation of this kind in the

amount of 88 thousand lei.

When determining the recoverability of a trade receivable, the changes considered were those occurred

in the customer’s credit rating from the time when the credit was granted till the date of reporting.

Debtors-suppliers have a discount limit:

in 2024:7.926 thousand lei

The receivables were evaluated at the market exchange rate communicated by the National Bank of

Romania available for the end of December 2023.

The favourable and unfavourable exchange rate differences between the exchange market rate, for

which are accounted the receivables in currency, and the market exchange rate communicated by the

National Bank of Romania available for the end of December 2023 were recorded in the related income

or expense account.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 9 – OTHER RECEIVABLES

insurance and the state budget, of which:

Amounts to recover from the National Health

System (allowances on medical leaves)

Amounts in the form of subsidies

Excise duties to recover for the fuel used

Other receivables in relation to the local budget

Other receivables in relation to the social

security and state budget

1416

Interest to receive from bank deposits

1.4871.814

Sundry debtors

745574

Impairment adjustments for receivables - sundry

debtors

(518)(539)

TOTAL OTHER RECEIVABLES

5.2863.301

Note:

- Other receivables in relation to the local budget represent the countervalue of the sanitation

tax refund resulting from the corrective statements for 2023;

- Other receivables from the social security and state budget represent amounts resulting from the

submission of the corrective statements on social security contributions, income tax and the

nominal register of the insured persons.

(unless specified otherwise, all amounts are stated in thousand lei

Products and services in progress

NOTE 10 - INVENTORIES

Semi-finished products

Packaging

Finished products

Gross value of the inventory (unadjusted)

ADJUSTMENTS FOR IMPAIRMENT OF INVENTORIES

Total adjustments Adjustments

for impairment of raw material

consumables

semi-finished products

finished products

* The raw material directly participates in the manufacture of the products and is found in the semi-

production in progress

Notes:

finished or finished product, either in their initial state, or transformed (bars, pipes, plates, profiles,

wires etc.);

** The consumables participate or assist in the manufacturing or operating process, without being

usually found in the finished product (auxiliary materials, fuels, spare parts, tools, jigs, fixtures and

other consumables).

The inventories are assessed at the lowest value between the cost and the net realisable value.

The net realisable value is the estimated sale price for inventories minus all estimated costs for

completion and the estimated costs required for the sale.

The cost of inventories includes: acquisition costs, conversion costs as well as other costs incurred to

bring inventories to the state and in the place where they are currently found.

Value adjustments are made regularly based on the findings of the inventory commissions and/ or the

module managers, in order to present them at the lowest value between the cost and the net realisable

value.

(unless specified otherwise, all amounts are stated in thousand lei

Within the Company, the goods considered to be depreciated are those that are older than the storage

period established by internal decision of the Board of Directors.

In accordance with the Accounting Policy Manual, various adjustments are set up at Aerostar SA for

the inventory depreciation, as follows:

-for raw material, consumables, semi-finished products and spare parts, different periods are

established, for each profit centre;

-for the inventories of finished products, depreciation adjustments are set up for each period, as

follows:

a) 100% of the value thereof, for inventories of this nature that do not rely on contracts with the

customers;

b) in variable percentages, as agreed with the profit centres involved, for the inventories of

unfinished products not delivered in due time as per the contractual provisions.

The total value of inventories recognized as an expense during the period is 219.820 thousand lei,

which consists of:

- 205.533 thousand lei representing the value of expenditure on stocks of materials;

- 12.924 thousand lei representing the value of expenditure relating to the consumption of water, gas

and electricity;

- 1.363 thousand lei representing the value of expenditure on non-stocked materials.

Aerostar S.A. holds stocks of finished (safety) products at the levels agreed in the contracts with its

customers.

Aerostar S.A. has no pledged stocks.

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 11 – CASH AND CASH EQUIVALENTS

The cash contains:

- cash available at the AEROSTAR cash desk;

- sight deposits held at banks (current accounts at banks).

The cash equivalents consist in: -

term deposits held at banks;

- cheques and commercial papers (promissory notes) deposited at banks for collection.

At the end of the reporting period the cash and cash equivalents consist in:

Cash at the cash desk

Sight deposits held at banks

Time deposits held at banks

Cheques and commercial papers receivable

Cash and cash equivalents

There are no restrictions on the current bank accounts and deposits held by banks.

Thevalue of the Line of Credit usable as an overdraft, available forthe futureoperating activity,

is 2.500 THOUSAND USD (the equivalent of 11.240 thousand LEI).

The Line of Credit was not used during the reporting period..

(unless specified otherwise, all amounts are stated in thousand lei

The company equity on 31 December 2023 is 551.957 thousand lei. The net increase of the company

NOTE 12 – COMPANY EQUITY

equity in 2023 compared to the end of the year 2022 amounted to 58.248 thousand lei.

Main equity elements in the period January-December 2023 compared to the year 2022:

The share capital remained unchanged:

On 31 December 2023, the share capital of AEROSTAR SA Bacau is 48.728.784 lei, divided into

152.277.450 shares having a nominal value of 0,32 lei.

The reserves increased by 78.644 thousand lei:

An increase by 54.902 thousand lei as a result of the distribution of the profit made in 2022 to

the destinations decided by the shareholders in the OGMS meeting of 20 April 2023;

An increase by 27.924 thousand lei on account of the distribution of the profit made in

2023 for reserves from fiscal facilities;

A decrease by 3.839 thousand lei due to the revaluation at fair value of the equity

instruments through other comprehensive income;

A decrease of 727 thousand lei arising from the transfer to retained earnings of the

revaluation differences at fair value of the equity instruments recognised through other

comprehensive income following the sale;

an increase by 384 thousand lei due to the transfer to reserves of the retained earnings

representing the surplus made from the revaluation reserves.

Other equity elements decreased by the amount of 3.827 thousand lei on account of the

deferred income tax recognized in the company equity.

The result carried forward increased by 639 thousand lei as follows:

Following the resolution of OGMS dated 20 April 2023, the profit made in the financial year

2022 taken over from the retained earnings, representingthe undistributed profit, was fully

distributed to the destinations decided by the shareholders;

An increase by 222 thousand lei on account of the deferred income tax recognised on

equity;

An increase by 801 thousand lei representing the net gain from the sale of equity

instruments recognised through other comprehensive income;

A decrease by 384 thousand lei due to the transfer to reserves of the retained earnings

representing the surplus made from revaluation reserves.

The balance of the retained earnings account on 31 December 2023 is 51.577 thousand lei,

consisting of:

Retained earnings arising from the use, at the date of transition to IFRS, of the fair value as

presumed cost = 26.478 thousand lei;

Retained earnings representing the gain from revaluation reserves, capitalised against the

depreciation of tangible fixed assets = RON 24.298 thousand;

(unless specified otherwise, all amounts are stated in thousand lei

Net realised gain on the sale of equity instruments recognised through other

comprehensive income = 801 thousand lei.

The result for the period was a profit in the amount of 93.028 thousand lei.

(unless specified otherwise, all amounts are stated in thousand lei

Reclassifica- from re-

Provisions for bonds granted to

customers

Provisions for

decommissioning property,

plant and equipment

Provisions for the employees’

benefits

Provisions for litigation

Provisions for bonds granted to

customers

Provisions for

decommissioning property,

Short-term provisions

Provisions for bonds granted to

customers

Provisions for customer’s

benefits

Provisions for litigation

Provisions for customer warranties

Provisions forcustomer warranties are set up to cover the risk of non-conformityduringthe warrantyperiod of

products sold and services rendered, in accordance with contractual provisions. The warranty period is

usually 24 months.

Provisions for decommissioning of property, plant and equipment

Provisions for the decommissioning of property, plant and equipment, mainly buildings, are established to

cover the costs of dismantling, removing items and restoring the sites where they are located and are included

in their cost. The value has been estimated using an annual discount rate of 6,5%.

(unless specified otherwise, all amounts are stated in thousand lei

Provisions for employee benefits

Provisions for employee benefits are set up for bonuses granted in accordance with the terms of the applicable

Collective Labour Agreement (end of financial year bonuses, performance bonuses) and for holiday leaves

not taken by employees in the previous year.

Provisions for litigation

In December 2023, a provision for the payment of compensation equal to the indexed, increased and updated

salaries and other rights that a former employee would have benefited from, from the date of dismissal until

the date of delivering the court decision, was set up based on the Civil Decision no. 928/29.12.2023 delivered

by the Court of Appeal of Bacau in the case no. 2601/110/2021.

Other provisions

The category Other provisions contains the provisions set up for:

- covering risks specific to the aviation industry, such as: risk of hidden defects, risk of detecting quality

incidents that can incur damages.

- coverage of some expenses regarding the Company’s obligations towards A.J.O.F.M., based on O.U.G.

95/2002;

- covering certain risks related to the application by customers of delayed payment penalties and damages

associated with the production of aeronautical products;

- in December 2023, as a result of the closure of a programme for the production of some components, the

provision set up to cover risks in the amount of 22.386 thousand lei was cancelled.

AEROSTAR S.A. BACAU

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 14 - SUBSIDIES FOR INVESTMENTS IN ASSETS

AEROSTAR recognizes as deferred income the subsidies related to assets.

Balance on 1 January, of which:

Short-term

Long-term

Subsidies received

Subsidies recorded in revenue

corresponding to the calculated

depreciation

Balance on 31 December, of which:

Thebalance recorded on 31 December 2023 represents subsidies related to investments in fixed assets

to be recorded in income as the calculated depreciation is charged to cost.

In 2023 AEROSTAR S.A. received subsidies to finance assets under the non-reimbursable financing

contract no. 10/28.02.2023 concluded with the Ministry of Economy, for the purpose of equipping the

AEROSTAR Testing Laboratory with NDT testing equipment, the value of the contract being 800

thousand lei, of which 381 thousand lei non-reimbursable financing, with 373 thousand lei remaining

to be recorded as income.

The subsidies received in the previous years for the financing of assets were related to the

implementation of 3 investment projects under 3 non-reimbursable financing agreements:

1.Agreement no. 210304/22.04.2010: "Expansion of the manufacturing and assembly capacities for

aerostructures destined for civil aviation", executed in the period April 2010 - October 2012, the

value of the subsidy received from the Ministry of Economy, Trade and Business

Environment (MECMA) being 5.468 thousand lei, with 720 thousand lei remaining to be

recorded as revenue;

2.Agreement no. 229226/14.06.2012: "Settingup a new manufacturingcapacityfordiversification of

production and export growth", executed between June 2012 and May 2014, the value of the

subsidy received from the Ministry of Economy, Trade and Business Environment (MECMA)

being 6.011 thousand lei, while the amount of 60 thousand lei remains to be recorded as revenue;

3. Agreement no. 5IM/013/24.03.2015: "Consolidation and sustainable development of the

machining and painting sectors through high performance investments", executed between March

and December 2015, the value of the subsidy received from the Ministry of European Funds

(MFE) being 8.299 thousand lei, with 1.214 thousand lei to be recorded as revenue.

All investment projects in fixed assets were implemented and completed according to the contractual

provisions assumed.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 15 – COMMERCIAL DEBTS

Prepaid amounts collected on customers’ account, of

which:

12.54010.991

Lending customers from Romania

1947

Lending customers from outside Romania

Suppliers of materials and services from Romania

Suppliers of materials and services from outside Romania

Suppliers – invoices not arrived

Suppliers of non-current assets

1.1844.003

Total commercial debts

48.05948.610

Prepayments received from external customers are for aircraft maintenance and repair work (99,65

%) and other services provided (0,35 %).

No mortgages were set up for the recorded debts.

The favourable or unfavourable exchange rate differences between the exchange rate at which the

foreign currency debts are recorded and the exchange rate communicated by the National Bank of

Romania valid for the end of December 2023 were recorded in the corresponding income or expense

accounts.

AEROSTAR S.A. BACAU

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 16 - OTHER LIABILITIES

Other current liabilities, of which:

state budget, of which:

– labour insurance contribution

235234

– tax on income in the form of salaries

719722

– contribution for unemployed people with

– other social liabilities

Other liabilities, of which:

Other long-term liabilities

1.4901.503

The category "Other long-term liabilities" includes the liability related to the right of use of the land

leased for the Maintenance Hangar of Iași.

The dividends in balance on 31 December 2023, in the amount of 2.735 thousand lei represent the

amounts remained in balance for the shareholders who did not show up at the offices of the paying

agent CEC Bank S.A. (the payingagent designated byAEROSTAR) and which were not time-barred.

The company has no outstanding debts to the state budget, social security budget and local budgets.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 17 – DEFERRED PROFIT TAX

The deferred tax is determined for the temporary differences occurring between the tax base of the

assets and liabilities and their accounting base. The deferred tax is calculated at a tax rate of 16%

applicable to the temporary differences.

The Company estimated and registered liabilities regarding the deferred tax related to immobilized

assets (resulting from differences between accounting and fiscal values, different useful lifetimes, etc.)

and reserves, and it recognized receivables regarding the deferred tax related to immobilized securities

(assets), inventories and trade receivables that were adjusted for depreciation, provisions for customer

bonds, provisions for benefits granted to the employees and other provisions.

Structure of the deferred income tax registered on 31.12.2023:

Liabilities from deferred tax

1. Liabilities related to the deferred tax generated by the differences between the

accounting bases (higher) and the fiscal ones (lower) of the non-current assets

2. Liabilities related to the deferred tax concerning legal reserves

3. Liabilities on deferred tax related to reserves from the fiscal facility

4. Deferred tax liabilities related to carry-forward representing a surplus from re-

evaluation reserves

5. Liabilities on deferred tax related to non-current assets-securities

Total liabilities on deferred tax

Receivables on deferred tax

1. Receivables on deferred tax related to other provisions

2. Receivables on deferred tax related to provisions for bonds granted to customers

3. Receivables on deferred tax related to provisions for employee benefits

4. Receivables on deferred tax related to adjustments for depreciation of inventories 5.

Receivables on deferred tax related to adjustments for depreciation of trade

receivables

Total receivables on deferred tax

20.316

TheCompanydid not recognizereceivables on deferred tax related to other provisionsforthe aviation

industry risks due to an uncertainty regarding the fiscal deductibility of the expenses that could arise

from the settlement of obligations in the future periods. Therefore, the differences between the tax base

and the accounting base would be null.

In the period 1 January 2023 – 31 December 2023, the company registered income from the tax on

deferred profit in the amount of 7.736 mii lei and expenses with the tax on deferred profit in the amount

of 5.379 thousand lei.

The tax on deferred profit recognized on the account of equity in the amount of 23.481 thousand lei

consists of liabilities on deferred tax in the amount of 23.996 thousand lei and receivables on deferred

tax in the amount of 515 thousand lei.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 18 - FINANCIAL INSTRUMENTS

A financial instrument is any contract generating simultaneously a financial asset for an entity and a

financial liability or an equity instrument for another entity.

The financial assets and liabilities are recognized when AEROSTAR SA becomes part of the

contractual provisions of the instrument.

On the reporting date AEROSTAR S.A. does not hold:

-any financial instruments kept for making transactions (including derived instruments); -

any financial instruments kept till due date;

-any financial instruments available for sale.

The financial assets of AEROSTAR S.A. include:

-sight and term deposits held at banks;

-trade receivables;

-Evergent Investments S.A. shares (stock symbol: EVER);

-immobilized receivables (collaterals deposited at third parties).

The financial liabilities of AEROSTAR S.A. include:

-trade liabilities.

On the reporting date, AEROSTAR does not have any financial debts related to overdrafts and long-

term bank loans.

The main types of risks, generated by the financial instruments held, to which AEROSTAR S.A is

d) interest rate risk.

a) Credit risk

The credit risk is the risk that one of the parties involved in a financial instrument generates a financial

loss for the other party as a result of the failure to meet a contractual obligation, related mainly to:

- sight and term deposits held with banks -

trade receivables;

Sight and term deposits are held only in first-tier banking institutions with the lowest risk ratings.

In some cases, specific trade credit risk mitigation instruments are required (advance receipts, bank

letters of guarantee of good payment, confirmed export letters of credit).

AEROSTAR has no significant exposure to a single partner and no significant concentration of

receivables in a single geographical area.

Exposure to credit risk

The accounting value of the financial assets, net of the depreciation adjustments, represents the

maximum exposure to the credit risk.

(unless specified otherwise, all amounts are stated in thousand lei)

The maximum exposure to the credit risk on the reporting date is presented in the table below:

Sight and term deposits held at banks

Trade receivables, net of adjustments for

depreciation

Evergent Investments S.A. shares

Non-current receivables

The maximum exposure to credit risk by geographical area for trade receivables net of

impairment adjustments is shown in the table below:

31.12.202331.12.2022

Domestic market6.706 17.379

Euro zone countries 29.502 21.810

U.K. 23.431 14.939

Other European countries2.912 2.176

Other regions5.372 10.637

Depreciation adjustments

The timeframe structure of gross trade receivables on the reporting date is presented in the table

below:

Adjustments Adjustments

for Gross value for

depreciation depreciation

31.12.202331.12.2022

Past due, total of which:

The movement in impairment adjustments for trade receivables during the year is shown in the

Balance on 1 January Adjustments

set up for depreciation

Adjustments for depreciations resumed as

revenues

Balance on 31 December

267

954

On 31.12.2023, 99% of the balance of trade receivables are related to customers with a good payment

record.

(unless specified otherwise, all amounts are stated in thousand lei)

b) Liquidity risk

The liquidity risk is the risk that AEROSTAR encounters difficulties to meet the obligations

associated to the financial liabilities which are settled by cash payments.

AEROSTAR’s policy regarding this risk is to maintain an optimum level of liquidity so as to pay for

the liabilities, as they become due.

To evaluate the liquidity risk, the treasury cash flows from operations, investments and financing

operations are monitored and reviewed weekly, monthly, quarterly and yearly in order to determine the

estimated level of net liquidity modifications.

Also, the specific liquidity indicators are reviewed monthly (general liquidity, immediate liquidity

and rate of general solvency) against the budgeted levels.

Furthermore, in order to reduce the liquidity risk, AEROSTAR maintains annually a liquidity reserve

as a Credit Line (usable as an overdraft) granted by banks to a maximum limit of 2.500 thousand USD.

The time intervals used to review the contractual due dates of the financial liabilities, with a view to

recording the timeframe for the cash flows in due time, are shown in the table below:

The cash flows included in the analyses of the due dates are not expected to take place earlier or at

significantly different values.

On 31.12.2023 AEROSTAR has no records of overdue financial liabilities.

c) Foreign currency risk

The foreign currency risk is the risk that the fair value or future cash flows of a financial instrument

fluctuate because of the changes in the currency exchange rates.

Exposure to the foreign currency risk

AEROSTAR is exposed to the foreign currency risks, as 81% of the turnover recorded in the reporting

period is denominated in USD and EUR, while a significant part of the operating expenses is

denominated in LEI.

Net exposure in original currency4.93810.123(35)

Therefore, AEROSTAR is exposed to the risk that the currency exchange rate variations will affect

both its net income and its financial position as expressed in LEI.

The net exposure of the financial assets and liabilities to the foreign exchange risk is presented below

based on the carrying amounts denominated in foreign currency recorded at the end of the reporting

period:

31.12.2023 thousand thousand thousand

EUR USD GBP

Sight and term deposits held at banks2.6803.90135

Trade receivables3.7329.487 -

Trade liabilities (1.474) (3.265) (70)

(unless specified otherwise, all amounts are stated in thousand lei)

Sensitivity analysis

In view of the net exposure calculated in the above table, Aerostar can be considered to be mainly

exposed to the currency risk generated by changes in the USD/USD and EUR/USD exchange rate.

Taking into consideration the evolution of USD/LEU and EUR/LEU exchange rate in the previous

years, a relatively high volatility (+/-5%) of the USD/LEU exchange rate and a moderate volatility

(+/-2%) of the EUR/LEU exchange rate can be noticed.

Thus, a reasonably possible variation of +/-5% for of the USD/LEU foreign exchange rate and +/-2%

for the EUR/LEU foreign exchange rate may be taken into account at the end of the reporting period.

The effect of the reasonably possible variation of the USD/LEU and EUR/LEU exchange rates on the

financial result of AEROSTAR is calculated in the following table:

Net exposure, in the currency of origin

Currency exchange rate

Net exposure in functional currency

Possible reasonable variation of exchange

rate

Effect of variation on the financial

result

+/- 491 k LEI

+/- 2.276 k LEI

d) Interest rate risk

For the reporting period AEROSTAR contracted a multi-product Credit Facility of 7.000 thousand

USD, intended for financing the Company’s operations, which includes:

1) Product A: in the amount of 2.500 thousand USD, usable as an overdraft, set up to provide at

any given time the necessary financial liquidity and flexibility (liquidity reserve);

2) Product B: in the amount of 7.000 thousand USD (provided that the aggregate amount used from

Product A and product B does not exceed the value of the multi-product Credit Facility), usable

as a facility to issue instruments to guarantee the performance of the commercial contractual

obligations by issuing bank letters of guarantee and import letters of credit.

The bank interest is applicable only for the overdraft under Product A in the amount of 2.500

thousand USD.

As Product A was not used in the reporting period, income and cash flows are independent of

changes in bank market interest rates.

On 31.12.2023, the level of guarantees granted under commercial agreements through the issuance of

bank letters of guarantee and import letters of credit amounts to 15.371 k LEI (equivalent to 3.419 k

USD).

On 31.12.2023 no mortgages are set up on real estate assets owned by AEROSTAR.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 19 - OPERATING INCOME

Sales revenue, of which:

Revenue from product sales

Revenue from services provided

Revenue from selling goods

Revenue from rental

Trade discounts granted

Revenue from other activities

629

536

finished and in progress

22.386

3.334

Revenue from the production of fixed assets

Revenue from operating subsidies

Revenue from subsidies for investments

Other revenue from operations

Total operating income

533.062

473.783

In 2023, the Company recorded income from operating subsidies in the amount of 611 thousand

lei. Most of the amounts were granted for the employment, for an indefinite period, of graduates

of educational institutions in accordance with Law No. 76/2002 on the unemployment

insurance system and stimulation of employment.

Other operating income in the amount of 1.868 thousand lei is represented, among others, by

income from the recovery of debts from former employees (tuition fees and other debts), income

from recovered damages and fees and income from compensation of purchases from protected

entities.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 20 – OPERATING EXPENSES

Expenses on employee benefits, of which:

Salaries and allowances

Expenses on meal tickets granted to employees

Expenses on social security

Expenses on raw material and material

Energy, water and gas

Other material expenses, of which:

Expenses on non-stock materials

Expenses on goods

Expenses on packaging

Expenses on other material

Expenses on external services, of which:

Other expenses on services supplied by third parties

Trade discounts received

Amortizations

Net expenses (revenues) from adjustments on

provisions

Net expenses (revenues) from adjustments on

current assets

14.760

11.678

Other operational expenses

7.198

6.934

Total operating expenses:

453.271

390.404

In accordance with the provisions of the International Financial Reporting Standards and of the

Accounting Policies Manual, the company registers adjustments on provisions (Note 13) and

adjustments for the impairment of the current assets, inventories, production in progress and

receivables, respectively (Note 8, Note 9 and Note 10).

In 2023, the company offered its employees meal vouchers worth 10.430 thousand lei and

holiday vouchers worth 772 thousand lei.

Other operating expenses amounting to 7.198 thousand lei include, among others: local taxes

and fees, sponsorships, environmental protection expenses.

(unless specified otherwise, all amounts are stated in thousand lei)

up and decreased/resumed adjustments, as

In 2023, AEROSTAR registered increased/set

follows:

During 2023, the impact of the adjustments on provisions is a decrease in the operating

expenses of 27.240 thousand lei.

In 2023, the impact of the adjustments for the impairment of current assets is an increase in

the operating expenses of 14.760 thousand lei.

Adjustments on provisions

(27.240)

(2.054)

31 December 31 December

Net expenses (revenues) from adjustments on

provisions

Adjustments for impairment of current assets

Increased/set up adjustments

Adjustments for impairment of investments

Adjustments for impairment of receivables

Losses from receivables and various debtors

Total increased/set up adjustments

Decreased/resumed adjustments

Adjustments for impairment of inventories

Adjustments for impairment of receivables

Total decreased/resumed adjustments

Net expenses (revenues) from adjustments on the

impairment of current assets

11.678

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 21 - FINANCIAL INCOME

Income from foreign currency exchange differences

Interest income

Income from shares held in subsidiaries

Income on financial assets measured at fair value

Total financial income

Aspects regarding the Company’s exposure to the risks generated by the financial instruments held are

presented in Note 18 Financial Instruments.

The income on financial assets measured at fair value represents the dividends related to the holding of

instruments in the equity of Evergent Investments S.A.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 22 – FINANCIAL EXPENSES

31 December

2023

Expenses from exchange rate differences

Expenses on interest related to leasing contracts

7.628 8.947

30 30

Total financial expenses

7.6588.977

In 2023 the company registered in the financial expenses category: -

expenses from unfavourable exchange rate differences;

-expenses on interests related to the right to use the land under concession for the

Maintenance Hangar in Iași.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 23 - TAX ON PROFIT

The tax on profit is recognized in the statement of profit or loss.

The tax on profit is the tax payable related to the profit made in the current period, as determined in

accordance with the fiscal regulations applicable on the reporting date.

The profit tax rate applicable for 31.12.2023 was 16% (the same rate was applied for the financial

year 2022).

31 December 2023

31 December 2022

Gross accounting profit96.95699.671

Expenses with current tax on profit 6.28511.721

Income tax on gains from the sale of securities held 153 -

Reconciliation of accounting profit with the fiscal profit for 31 December 2023Differences

Gross accounting profit,

Tax reductions, from which:

accounting profit, restated

Related to investments

14% bonus according to

GEO 153/2020

Tax on final profit

Legal rate applicable

16,00%

Tax on final profit

Applicable legal rate

Actualaveragetaxrate,

calculatedon gross

Comparative key figures

31 December 2022

Gross accounting profit

Expenses with current tax on profit

Reconciliation of accounting profit with the fiscal profitDifferences

Gross accounting profit,

Tax reductions, of which:

Related to investments

12% bonus according to

(unless specified otherwise, all amounts are stated in thousand lei)

Applicable legal rate

16,00%

Applicable legal rate

16,00%

Actualaveragetaxrate,

calculated on gross accounting

11,75 %

profit, restated

* The revenues and expenses are obtained after deducting from the total revenues and total expenses,

respectively, the revenues and expenses related to the activities subject to the specific tax.

The main factors that affected the actual tax rate:

-expenses not deductible for tax purposes, of which: expenses related to the setting up or increase of

provisions ( 32.106 thousand lei), value adjustments on current assets not deductible for tax

purposes, expenses related to book depreciation not deductible for tax purposes, etc.;

-tax facilities representing the corporate income tax exemption on investments made under the

Art.22 of the Tax Code (4.468 thousand lei), sponsorships, 14% bonus according to GEO 153/2020

on the establishment of tax measures to stimulate the maintenance/growth of own capital;

-non-taxable income obtained as a result of the recovery of non-deductible expenses, of which

59.347 thousand lei represents income from the resumption of provisions.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 24 - RESULT PER SHARE

The profit per basic share was calculated based on the profit attributable to the ordinary shareholders

and on the number of ordinary shares.

The diluted result per share is equal to the result per basic share, as the company did not register any

potential ordinary shares.

IN LEI

31.12.2023

31.12.2022

Profit attributable to ordinary shareholders

Number of ordinary shares

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 25 - AVERAGE NUMBER OF EMPLOYEES

Average number of employees

Total number of employees

As on 31 December 2023, the total number of employees in the Company is 1.846, of which 1.752 are

own employees and 94 persons represent labour force hired through a temporary employment agent.

As on 31 December 2022, the total headcount was 1.845 employees, of which 1.741 wereown employees

and 104 persons represent labour force hired through a temporary employment agent.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 26 - TRANSACTIONS WITH AFFILIATED PARTIES

Acquisitions of goods and services

Sales of goods and services

Dividends received by Aerostar

The transactions with the affiliated parties in the period 01.01.2023-31.12.2023 consisted in:

•Services provided by Airpro Consult SRL Bacau to AEROSTAR SA Bacău for temporary

manpower;

•Machinery rental services provided by Foar SRL Bacau to AEROSTAR SA Bacău;

•Space rental services provided by AEROSTAR SA Bacau to Foar SRL Bacău;

•Dividends received by AEROSTAR SA from Foar SRL Bacău (Note 7).

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 27 - INFORMATION REGARDING THE CASH FLOW

The method used in the Cash Flow Statement is the direct method.

The cash flows statement presents the cash flows and cash equivalents classified by operating

activities, investments and financing, thus indicating how AEROSTAR generates and uses the cash and

cash equivalents.

In the context of preparing the Cash Flows Statement:

- the cash flows are the amounts collected and paid in cash and cash equivalents;

- the cash includes the cash available in the company’s cash office and the sight deposits held at

banks (available in the current accounts).

- the cash equivalents comprise the term deposits held at banks.

Thetreasurycash flows from the transactions madein foreign currencyareregistered in the functional

currency (LEU) by applying to the foreign currency value the exchange rate between the functional

currency and the foreign currency on the date of the cash flow (the date of making payments and

collections).

The earnings and losses arising from the exchange rate variation are not treasury cash flows.

Nevertheless, the effect of the exchange rate variation on the cash and cash equivalent held or owed in

foreign currency is reported in the treasury cash flows statement, but separately from the treasury cash

flows arising from operations, investments and financing, so as to reconcile the cash and cash

equivalents at the beginning and end of the reporting period.

The operating activity is AEROSTAR S.A.’s main cash-generating activity.

Thus:

- the amounts collected from customers were worth 527.562 thousand LEI;

- the amounts collected from the State Budget were worth 4.468 thousand LEI, of which 3.851 thousand

LEI represent VAT and excise duty recoveries and 617 thousand LEI are receipts in the form of

operating subsidies;

- the payments to suppliers and employees amounted to 416.908 thousand LEI, of which 310.714

thousand LEI were payments to suppliers and 106.194 thousand LEI to employees;

- the tax payments to the State Budget amounted to 81.418 thousand LEI, of which 67.729 thousand

LEI in payroll taxes, 4.907 thousand LEI in VAT, 6.969 thousand LEI in corporate income tax, 1.813

thousand LEI in other taxes.

The operating activity generated a net cash of 33.704 thousand LEI, a decrease of 29.722 thousand LEI

compared to 2022, mainly due to the increase in the volume of purchases of raw materials and

implicitly the increase in the level of payments to suppliers by 55.473 thousand LEI.

The investment activity included:

bank interest receipts amounting to 14.508 thousand LEI from the bank deposits set up.

dividends received from Evergent Investments S.A. in the amount of 3.645 thousand LEI;

proceeds from thesale of Evergent shares (stock symbol: EVER) in the amount of 8.283 thousand

LEI.

the purchased shares are held for the collection of dividends as well as for gains from their sale.

The sale of shares generated a gross gain of 953 thousand LEI.

dividend receipts from affiliated entities (FOAR S.R.L.) in the amount of 153 thousand LEI;

receipt of non-reimbursable funds from the Ministry of Economy in the amount of 381 thousand

LEI, funds used for the purchase of NDT testing equipment.

payments for the purchase of tangible and intangible fixed assets in the amount of 22.833

thousand LEI;

(unless specified otherwise, all amounts are stated in thousand lei)

- payments for the purchase of financial fixed assets in the amount of 10.653 thousand LEI,

representing purchases of Evergent Investment S.A. shares (stock symbol: EVER), traded on the

Bucharest Stock Exchange;

The amount of cash flow allocated so as to increase the operating capacity represents 4% of the

aggregate amount of cash used in operating, investing and financing activities.

As part of the financing activity, an amount of 26.370 thousand LEI was paid, representing dividends

due to AEROSTAR shareholders.

The level of cash and cash equivalents recorded as at 31.12.2023 is 245.792 thousand LEI, down by

381 thousand LEI compared to the beginning of the year.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 28 - LIABILITIES AND OTHER OFF-BALANCE ITEMS

AEROSTAR S.A. registers as off-balance items, the rights, liabilities and goods which are not

recognized in the company assets and liabilities, i.e:

guarantees granted to partners as letters of bank

guarantee and letters of credit

guarantees received from partners – as letters of

bank guarantee and letters of credit

inventories of other material released for use

(tooling, jigs, fixtures, safety equipment, measuring

and control equipment, technical library etc.)

materials received in custody

finished products received in custody

materials - customers

tangible and intangible assets – obtained or

purchased as a result of co-financed activity

materials received for processing/repairs

supporting assets related to concession agreements-

Hangar Iasi

fixed assets proposed for disposal

Other off-balance values, of which:

material guarantees established for the managers’

liability for the management of assets

liabilities for covering certain future obligations to

A.J.O.F.M. based on 9624/12.12.2011 regarding

the defence industry

debtors removed from accounts, monitored further

Greenhouse Gas Emission Certificates

4.5855.701

On 31 December 2023, AEROSTAR S.A. held a total of 11.931 greenhouse gas emission

certificates.

The market value on the last trading day of a GHG certificate was 77,25 euro, according to the

European Energy Exchange website (in December 2022: 80,90 euro), at a re-evaluation exchange rate

of 4,9746 lei/euro.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 29 – DIRECTORS’ REMUNERATION

Board of Directors of AEROSTAR S.A. on 31.12.2023:

Surname and first name

TONCEA MIHAIL - NICOLAE



DOROŞ LIVIU-CLAUDIU

President

Vice-president

Member

Member

In 2023, did not grant advance payments or credits to the members of the Board of Directors and did not

Legal

Advisor

make any commitment on their account as a collateral of any kind.

In the Ordinary General Meeting of 14 December 2023, the shareholders of Aerostar agreed to freeze, at

the level decided by the Ordinary General Meeting of Shareholders on 9 July 2020, the directors’

remuneration forthe financial year 2023, appointed byAGM Resolution no. 26/09.07.2020, respectively:

by maintaining for each elected Member of the Board of Directors a monthly fixed net

remuneration of 4.750 lei;

a maximum level of additional remuneration for the members of the Board of Directors who also

have executive duties of a fixed monthly amount of no more than 10 (ten) times (including) the

fixed remuneration of 4.750 lei, applied individually, as appropriate;

by empowering the Board of Directors to negotiate them within the approved ceiling.

The gross indemnities granted to the members of the Board of Directors in the period January-December

2023, by virtue of their responsibilities amounted to 1.725 thousand lei.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 30 – RISK MANAGEMENT

AEROSTAR is exposed to multiple risks and uncertainties that can affect its financial performance.

The business lines run by AEROSTAR, the operational results or the financial statements could be

affected by the materialization of the risks presented below.

AEROSTAR pursues to secure the average and long-term sustainability and to reduce the

uncertainty associated with its strategic and financial objectives.

Risk management processes are in place to ensure that risks are identified, analysed, assessed and

managed so as to minimise their effects to an agreed level.

However, there may be risks and uncertainties in addition to those described below, which are not

currently known or are considered insignificant, but which in the future may affect the lines of business

run by AEROSTAR.

Operational Risk

It is the risk to incur losses or the risk of failure to make the estimated profits, determined by:

-the use of processes, systems and manpower that were either inadequate or failed to function

properly;

-external events and actions: deterioration of the global economic conditions, natural disaster

or other events that can affect AEROSTAR’s assets.

Considering the global political turmoil, in the future we may face new types of risks, which is why

AEROSTAR closely monitors the main areas of conflict.

The Operational Risk is also associated to the Legal Risk, defined as the risk of loss, resulting from the

fines, penalties and sanctions AEROSTAR is liable to in case of non-application or

misapplication of legal or contractual dispositions or regulations, as well as due to the fact that the

rights and contractual obligations of AEROSTAR and/or of its business partner are not properly

established.

The effects of the legal risk are monitored and eliminated through a permanent information system

regarding the legislative modifications, as well as by setting up a review, endorsement and approval

system for the terms and conditions included in the commercial agreements.

AEROSTAR has allocated and will continue to allocate investment funds and other operational

expenses in order to prevent and manage the operational risk.

Moreover, AEROSTAR aims to have at its disposal own funds to cover the risks to which it is

exposed, by setting up provisions for risks and related expenses.

Furthermore, in order to mitigate the operational risk, AEROSTAR renews each year a civil liability

insurance contract with leading insurance and reinsurance companies for its main lines of business

(manufacture of aviation products and maintenance of commercial aircraft).

The Credit Risk is the risk that AEROSTAR might bear a financial loss as a result of the failure to

meet the contractual obligations by a partner, being determined mainly by sight and term bank deposits

with banks and trade receivables.

Deposits held with banks are placed only with first-tier banking institutions that are considered to

have high creditworthiness.

The credit risk, including the country risk for the country where the customer performs its activity, is

managed per business partner. When necessary, specific instruments of credit risk mitigation are

requested (advance payments, letters of bank guarantee, confirmed letters of credit).

(unless specified otherwise, all amounts are stated in thousand lei)

AEROSTAR has no significant exposure to a single partner and does not have a significant

concentration of turnover in a single geographical area.

However, there is exposure to the global market for Airbus programmes, as a large share of the

company’s products are integrated on Airbus aircraft.

A presentation of quantitative information on AEROSTAR’s exposure to credit risk is detailed in

Note 18 (Financial Instruments) to the Financial Statements.

Liquidity risk is the risk that AEROSTAR will encounter difficulties in meeting its liability

obligations as they fall due.

For liquidity risk management purposes, cash flows are monitored and analysed on a weekly, monthly,

quarterly and annual basis to determine the estimated level of net changes in liquidity. These analyses

provide the basis for funding decisions and capital commitments.

In order to mitigate liquidity risk, AEROSTAR maintains an annual liquidity reserve in the form of a

Credit Line available for use in the form of bank overdrafts in the amount of 2.500 thousand USD.

During the reporting period AEROSTAR did not use the Credit Line, as all the Company’s activities

were financed from its own sources.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market prices.

The market risk comprises the price risk, the currency risk and the interest rate risk.

AEROSTAR is mainly exposed to the price risk caused by fluctuations in the price of raw materials and

materials used in the production processes due to exceptional events, the imposition of

international sanctions with consequences on the limitation of the possibility to supply parts and

materials, the increase in the costs of specific taxes for import/export of metal products to and from the

USA.

This risk is managed by:

- diversifying the supplier portfolio, which can provide increased negotiating leverage in the

event that the price of raw materials increases with some suppliers.

- concluding long-term contracts with fixed price clauses.

AEROSTAR is exposed to the exchange rate risk because 81% of its turnover is related to USD and

EUR, while a significant part of the operating expenses is denominated in LEI.

Thus, AEROSTAR is exposed to the risk that the exchange rate variations will affect both its net

income, as well as its financial position, as they are expressed in LEI.

An analysis of AEROSTAR’s sensitivity to the foreign exchange rate variations is detailed in Note 18

(Financial Instruments) to the Financial Statements.

As far as the interest rate is concerned, due to the fact that AEROSTAR did not use the contracted

Credit Line in the reporting period, the income and cash flows are independent from the interest rate

variation on the banking market.

Other aspects concerning risk management are presented in the chapter OPPORTUNITY AND RISK

MANAGEMENT of the Board of Directors’ Report.

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 31 – PREPAID EXPENSES AND INCOME

31 December

2023

Prepaid expenses (short-term)

789617

Prepaid income (short-term)

2.9161.876

The expenses made and the income obtained in the current period, but regarding future periods or

financial years are registered distinctly in the accounting department, as prepaid expenses or prepaid

income, as applicable.

The category of prepaid expenses on the books on 31 December 2023 includes amounts to resume

within a period of up to one year representing, inter alia, fees and taxes, subscriptions, insurance

policies, commissions, participation in fairs and conferences, on-line services, maintenance of IT

systems.

As on December 31, 2023, Aerostar did not recognize any long-term prepaid income. The category

short-termprepaidincomeincludes amounts relatingto the deliveryof goods and services rendered,

where the income recognition conditions of IFRS 15 are not met (the customers have not yet taken

control of the goods/services).

(unless specified otherwise, all amounts are stated in thousand lei)

NOTE 32 - ASSETS REGARDING THE RIGHTS TO USE THE LEASED ASSETS: reporting period 31 December 2023

Values on 31 December 2023Values on 01 January 2023

(unless specified otherwise, all amounts are stated in thousand lei)

COMPARATIVE KEY FIGURES - ASSETS REGARDING THE RIGHTS TO USE THE LEASED ASSETS:

reporting period 31 December 2022

Values on 31 December 2022Values on 01 January 2022

Accumulated

Gross amountdepreciationNet amountGross amount

The right to use the land for the Hangar Mentenanță Iași was revalued at the exchange rate communicated by the National Bank of Romania on the last

for the Maintenance1.773

banking day of each reporting period.